HOME > About Us > In The News > Press Release
In The News
California Luxury Home Values Decline
Luxury Prices Continue Downward Trend in Los Angeles, San Diego, San Francisco
February 24, 2009
SAN FRANCISCO — Luxury home prices in Los Angeles, San Diego and San Francisco fell again in the fourth quarter of 2008 compared to a year ago, 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 Dec. 31, 2008, the Index indicated the following:
- Los Angeles area values declined 3.7% in the past year and 0.7% from the third quarter of 2008. The average luxury home in Los Angeles is now $2.31 million.
- San Diego area values fell 8.3% in the past 12 months and 2.2% from the third quarter of 2008. The average luxury home in San Diego is now $1.93 million.
- San Francisco Bay Area values decreased 3.1% in the past year and 1.8% from the third quarter of 2008. The average luxury home in San Francisco is now $2.93 million.
"Luxury home values in California's urban coastal markets have so far held up better than the overall housing market, although prices are under pressure due to weaker economic conditions, employment losses and declining investment portfolios," said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. "Many buyers are holding off purchases of homes because of uncertainty about property values, while many sellers remain unwilling to reduce prices. Lower sales activity is making it difficult to assess luxury home values."
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 in the Los Angeles area have been trending down since the third quarter of 2007. Since then, values have decreased almost 5%. In five of the past six quarters, Los Angeles luxury values have fallen.
Real estate professionals in the Los Angeles area said there are minimal sales, and prices are weakening. "There is significant downward pressure from $2 million to $20 million, but there are buying opportunities," said John Iglar of Teles Properties in Beverly Hills. "If a house is priced very fairly, even at the higher end of the market it will get plenty of activity and multiple offers."
In Santa Barbara, buyer interest was picking up, although the middle tier of the luxury market was struggling. "Prices below $1.5 million and above $4 million are stronger than the mid-range," said Joanne Schoenfeld of RE/MAX in Santa Barbara. "Trade-up buyers have been most impacted by the difficulties in the rest of the market."
In the San Fernando Valley, the luxury market was also under downward pressure. "The luxury end is faring a bit better," said Monty Iceman of Prudential California Realty in Encino. "It is definitely slower, but it is moving."
San Diego Area Values
Values in the San Diego area have fallen for six straight quarters. Since the third quarter of 2007, San Diego values are down almost 10%. San Diego values at the end of the fourth quarter of 2008 were at about the same level as the first quarter of 2005.
In La Jolla, buyers remained on the sidelines. "People are looking, but they're just not buying. Even the oceanfront property is sitting," said Pam Reed of Willis Allen Real Estate in La Jolla. "However, if someone is looking for real estate for the long term, there are some incredible bargains right now. I can't believe some of the deals I've seen."
In Rancho Santa Fe, unsold inventory was high and transaction volume was low. "There is continued downward pressure on prices because of high inventory levels," said Mike Taylor of Prudential California Realty in Rancho Santa Fe. "The luxury market is a lagging indicator in terms of price readjustments. But we are starting to see a slight increase in buying, and we've had more showings recently than in November or December."
San Francisco Bay Area Values
In the San Francisco Bay Area, prices declined for a second consecutive quarter. Since the third quarter of 2007, values have fallen almost 5%. In four of the past six quarters, prices have declined.
In the city of San Francisco, the market for luxury properties remained active. "In Pacific Heights and Presidio Heights, houses in prime condition have been selling for the asking price or right over it," said Marsha Calegari of Calegari & Associates in San Francisco. "But these properties have to be in excellent condition and well-priced, or they will sit. Overall, there are still enough buyers."
Chris O'Connor of McGuire Real Estate in San Francisco agreed. "The prime neighborhoods are holding their own. With attractive interest rates and a buyers' market, it is a golden opportunity to purchase this year. It's always best to buy during a recession, and we're in the second year of the recession."
On the Peninsula, prices and activity appeared to be softer than in San Francisco. "There are people out there with money, but they are taking their time and they are negotiating hard," said Ethel Green of Intero Real Estate in Los Altos. "There is a window of opportunity for buyers now because they can negotiate again with sellers."
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
