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Luxury Home Prices Rose Modestly in San Francisco, Fell Slightly in Los Angeles and San Diego in Third Quarter
Prices Remain Relatively Stable From Third Quarter A Year Ago
November 20, 2007
SAN FRANCISCO – Luxury home prices rose modestly in San Francisco, but declined slightly in Los Angeles and San Diego in the third quarter of 2007 from the second quarter of the year, according to the First Republic Prestige Home Index™ by First Republic Bank, a leading provider of private banking, private business banking and wealth management services.
In the quarter ended Sept. 30, 2007, the Index indicated the following:
Los Angeles area values declined 1.4% from the second quarter of 2007 and rose 2.4% from the third quarter of 2006. The average luxury home in Los Angeles is now $2.43 million.
San Diego area values fell 2.3% from the second quarter of 2007 and dropped 1.9% from the third quarter of 2006. The average luxury home in San Diego is $2.14 million.
San Francisco Bay Area values increased 2.6% from the second quarter of 2007 and were up 3.9% from the third quarter of 2006. The average luxury home in San Francisco is a record $3.08 million.
“Luxury home prices in Southern California fell slightly from the second quarter of 2007,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “In the San Francisco Bay Area, prices are up solidly in the most recent quarter, and they are up year-over-year. In First Republic’s urban coastal communities, the luxury market is active, and buyers are facing a scarcity of attractive inventory in many areas.”
First Republic Bank produces the Prestige Home Index each quarter with Fiserv CSW Inc., a leading provider of automated property valuation services and home price metrics to U.S. financial institutions. Historical results of the Index are accessible at www.firstrepublic.com. The Index has tracked luxury homes since 1985.
Los Angeles Area Values
Values declined 1.4% from the second quarter of 2007 after rising just 1.1% in the first quarter of the year. Overall, the market showed signs of weakening.
“The market is definitely more sluggish, and there is no urgency among buyers right now,” said Billy Rose of Prudential California Realty in Beverly Hills. “However, there is still a shortage of inventory. All of my clients are looking for the same thing – properties in the $6 million to $15 million range. This doom and gloom we’re hearing really isn’t applicable in the higher end.”
In Orange County, a scarcity of coastal properties has kept values firm, although inland properties are beginning to soften. “There is nothing for sale on the oceanfront or bayfront,” said Kim Bibb of HOM Real Estate in Newport Beach. “Buyers are still looking, but they are not writing as many offers.”
San Diego Area Values
In the third quarter of 2007, prices in the San Diego area were down 2.3% from the second quarter of the year and 1.9% from the third quarter a year ago.
Along the beach communities, prices appeared firm, although both buyers and sellers were proceeding cautiously. “In La Jolla, prices don’t go down – the homes just don’t sell,” said Peggy Chodorow of Willis Allen Real Estate in La Jolla. “Sellers generally have a lot of staying power here to wait it out. When buyers find a property, they are watching it to make sure it’s a good buy.”
In Rancho Santa Fe, both the low end and high end of the market are active, but properties priced between $3 million and $7 million are moving slowly. “There are definitely buyers out there, but everyone wants a deal,” said Linda Sansone of Willis Allen in Rancho Santa Fe. “Putting together a transaction is much more work because buyers are looking at everything and sellers are digging in.”
San Francisco Bay Area Values
San Francisco Bay Area values were the strongest in the state. The average luxury home in the San Francisco Bay Area exceeded $3 million for the second quarter in a row. The market, particularly in San Francisco’s close-in North Bay and Peninsula communities, is showing surprising strength.
Agents said values were firm in San Francisco, Silicon Valley and Marin County, but were beginning to slip in the East Bay. “We have a relatively bulletproof market in the upper end in San Francisco,” said Tom Cooke of TRI Coldwell Banker in San Francisco. “There’s never enough inventory to satisfy buyer demand in the city. The difference this year is that two or three people are moving on homes for sale, compared to five or six people last year. There is no softening of prices.”
On the Peninsula, the market was slower due largely to limited inventory. “Shortage is the name of the game in Palo Alto,” said Steve Tenbroeck of Alain Pinel Realtor in Palo Alto. “We have record low inventory. In the $3 million to $6 million range, demand is slowing because buyers are sensitive to consumer confidence. Below that price range, it is still a seller’s market, with multiple offers and homes selling very quickly.”
In Marin County, values were holding, despite fewer homes for sale. “If the inventory were better, we’d have more sales,” said Tina McArthur of Pacific Union Real Estate of Larkspur. “There isn’t a day that goes by when agents aren’t asking one another whether there are any properties for sale between $3 million to $5 million.”
About The First Republic Prestige Home Index
The First Republic Prestige Home Index™ is the first statistical model of its kind customized to measure changes in homes valued at more than $1 million in key California urban markets. Some common features of luxury homes in the Index: 3,000 to 6,000 square feet, three to six bedrooms, and three to six bathrooms. San Francisco Bay Area properties include a cross-section of luxury homes in Alamo, Atherton, Belvedere, Danville, Healdsburg, Hillsborough, Lafayette, Los Altos, Los Gatos, Mill Valley, Moraga, Orinda, Palo Alto, Piedmont, Portola Valley, Ross, St. Helena, San Francisco, Saratoga, Sonoma, Tiburon and Woodside. Properties in Los Angeles represent a cross-section of luxury homes in Arcadia, Beverly Hills, Calabasas, La Cañada Flintridge, Encino, Los Angeles, Malibu, Marina del Rey, North Hollywood, Pacific Palisades, Pasadena, Playa del Rey, Santa Monica, Studio City and the West Los Angeles enclaves of Bel Air, Brentwood and Westwood. San Diego properties represent a cross-section of luxury homes in Carlsbad, Coronado, Del Mar, Encinitas, La Jolla, La Mesa, Poway, Rancho Santa Fe, San Diego and Solana Beach. In producing the Index, Fiserv CSW Inc. draws upon its economic database and years of experience in tracking single-family home values; collects and cross-checks data from multiple sources; achieves a weighted balance of validation elements such as repeat sales, comparable sales, and physical home characteristics; and combines this with First Republic's extensive local market knowledge.
About First Republic Bank
First Republic Bank is a private bank and wealth management company offering personal banking, business banking, trust, brokerage and wealth management services. The Bank specializes in delivering personalized relationship-based service through preferred banking or trust offices in ten major metropolitan areas: San Francisco, Los Angeles, Santa Barbara, Newport Beach, San Diego, Las Vegas, Portland, Seattle, Boston and New York City. First Republic offers wealth management services through First Republic Wealth Advisors and First Republic Investment Management. Brokerage services are provided through First Republic Securities Company LLC, and trust services are provided through First Republic Trust Company. More information is available on the Bank’s website at www.firstrepublic.com. First Republic is a division of Merrill Lynch Bank & Trust Co., FSB.
Contact:
- Greg Berardi
- Blue Marlin Partners
- (415) 239-7826
- greg@bluemarlinpartners.com
