HOME > About Us > In The News > Press Release
In The News
California Luxury Home Values Increase
Los Angeles Climbs 27 Percent and San Diego Rises 22 Percent Compared to Year Ago
December 2, 2004
SAN FRANCISCO - Luxury home values in Los Angeles and San Diego posted record highs in the third quarter of 2004, while San Francisco values rose 13 percent compared to a year ago, according to the First Republic Prestige Home Index(TM) by First Republic Bank, one of California's leading providers of full-service banking, investment management, and trust services.
The Index, which has tracked luxury homes since 1985, found:
- Los Angeles values jumped 13.2% from the second quarter of 2004 and 27.2% from the third quarter of 2003 -- the largest year-over-year increase recorded by the Index for the Los Angeles area. The average luxury home in Los Angeles is now valued at a record $1.95 million, up $417,000 from a year ago.
- San Diego values climbed 7.4% from the second quarter of 2004 and 22.4% from the same period a year ago -- the largest year-over-year gain recorded by the Index for the San Diego area. San Diego luxury home values averaged $1.86 million, up $340,000 from a year ago.
- San Francisco Bay Area values declined 0.5% from the second quarter of 2004, but were up 13.4% compared to a year ago. The average luxury home is now valued at $2.53 million, slightly below the record set in the second quarter of 2004.
First Republic Bank (NYSE: FRC) produces the Prestige Home Index each quarter with Case Shiller Weiss, 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.
Los Angeles Values
The average value of a luxury home in the Los Angeles area has now risen for 10 consecutive quarters. Values set all-time highs in each of the first three quarters of 2004.
"This market is hotter than ever," said Loren Judd of Westside Estate Agency in Beverly Hills. "There is little inventory and a lot of demand. We are also getting foreign buyers because of the strong Euro." Despite the extraordinary year-over-year gain, Judd said that Los Angeles real estate is not overvalued because of the quality of life and strength of the region's economy. "The market is as strong as I've seen it. There is much more wealth than there is good real estate."
John McCormick of Prudential California Realty in Brentwood agreed that a lack of inventory is powering the market. "There has been a dearth of available homes for the past 2-1/2 years, and it may be a little more pronounced now. The availability of cheap money and the lack of attractive alternative investments are also driving the market."
In Orange County, the market is good, although less robust than in Los Angeles. Inventory levels have fallen significantly from the middle of the year, when a rush of homes went on the market in anticipation that prices might fall as interest rates rose.
In fact, prices have remained firm, particularly for homes selling for $1 million to $2 million. Marquee properties priced over $2 million are seeing multiple offers, but that market is softer than it was earlier in the year. "Anything reasonably priced has been sold," said Randy Kershaw of Rogers Realty in Corona Del Mar. "Prices are going along at a predictable pace. The market is good."
San Diego Area Values
In the San Diego area, luxury home values set their sixth consecutive quarterly record and posted double-digit gains in each of the first three quarters of 2004.
"This is certainly the best year I've seen," said Pam Reed of Willis Allen in La Jolla. "Last year, the highest prices through the Multiple Listing Service were up to $5 million -- and not over. This year, there have been 11 sales over $5 million through November 2004." Reed said that prices have leveled out since the middle of the year, and she expects the market to remain the same in the first part of 2005.
Janet Lawless of Prudential California Realty in Rancho Santa Fe said a confluence of factors is driving the market, including a lack of attractive investment opportunities and a growing number of baby boomers trading into larger homes. "All of this is hitting at once, and I think it is driving price increases. We've got willing buyers and happy sellers. People are continuing to have confidence in real estate."
San Francisco Bay Area Values
In the San Francisco Bay Area, the market cooled slightly from the second quarter of 2004, although values recorded double-digit, year-over-year gains in the second and third quarters. Since the beginning of the year, luxury home prices in the region have risen by $160,000.
Analuz Holloway of Sotheby's International said the lower end of the luxury market remains very strong, but homes priced above $5 million are moving slowly. "Anything between $1 million and $2.5 million is selling over the asking with multiple offers. There are also a lot of sales between $2 million to $3 million."
Janis Stone of TRI Coldwell Banker in San Francisco agreed that the lower end of the luxury market remains very brisk, and sales between $2.5 million and $4 million are up sharply over last year. "I think we're headed toward a good balanced market. There are still a lot of people who want to buy. There is very little new product."
In Marin County, the lower range of the luxury market is also active, but the market for homes priced above $2.5 million is softer. "Depending on the area, I think we have a strong market for homes priced at $1 million to $2.5 million," said Nathalie Kemp of Avalar in San Rafael. "I don't think we're going to see the market go crazy, but I don't see it slowing down."
About The First Republic Prestige Home Index
The First Republic Prestige Home Index(TM) 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 are properties that are 3,000 to 6,000 square feet, have 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 Canada 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, Case Shiller Weiss 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 NYSE-traded private bank and wealth management firm. The Bank and its subsidiaries specialize in providing personalized, relationship-based wealth management services, including private banking, private business banking, investment management, trust, brokerage and real estate lending. As of September 30, 2004, the Bank and its subsidiaries had total Bank assets and other assets under management and administration of $23.2 billion. First Republic Bank provides its services online and through preferred banking offices in seven major metropolitan areas: San Francisco, Los Angeles, Orange County, San Diego, Santa Barbara, Las Vegas and New York City. More information is available on the Bank's Web site at www.firstrepublic.com.
Contact:
- Greg Berardi
- Blue Marlin Partners
- (415) 239-7826
- greg@bluemarlinpartners.com
