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Prestige Home Index™
California Luxury Home Values Decline
High-End Housing Prices Soften Further in Los Angeles, San Diego, San Francisco
June 9, 2009
SAN FRANCISCO — Luxury home prices in Los Angeles, San Diego and San Francisco fell again in the first quarter of 2009 compared to a year ago, according to the First Republic Prestige Home Index™ by First Republic Bank, a leading provider of private banking and wealth management services.
In the quarter ended March 31, 2009, the Index indicated the following:
- Los Angeles area values declined 7.5% over the past year and 6% from the fourth quarter of 2008. The average luxury home in Los Angeles is now $2.17 million.
- San Diego area values fell 13.3% year over year and 7.6% from the fourth quarter of 2008. The average luxury home in San Diego is now $1.79 million.
- San Francisco Bay Area values decreased 10.1% over the past year and 8% from the fourth quarter of 2008. The average luxury home in San Francisco is now $2.70 million.
"Luxury home values in California's urban coastal markets were impacted in the first quarter due to economic weakness," said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. "Buyers and sellers of higher-priced properties are cautious. Well-priced, well-located homes in good condition and modest inventories have led to smaller price declines than in other segments of the market. Recently, we have seen a growing number of purchases and a renewed sense of purpose among buyers because values in many communities are more attractive as prices have declined."
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 fallen for the past five quarters on a year-over-year basis. Prices are at approximately the same level as they were in the second quarter of 2005.
On the West Side of Los Angeles, the market was very slow in the first quarter, but activity is up markedly. "In the past five or six weeks, activity has probably doubled from the beginning of the year," said Michele Hall of Coldwell Banker in Brentwood. "Buyers have been following this market and think this is a good time. If you want to buy, interest rates are on your side and there is good inventory to purchase."
In Santa Barbara, the market was also weak in the first quarter, but there are signs it is starting to improve. "We're not getting the activity and the excitement we've seen in the past, but that may be changing," said Joanne Schoenfeld of RE/MAX in Santa Barbara. "We're seeing some pending sales, and we think maybe we've achieved the bottom. The buyers are starting to come out. We're hopeful."
San Diego Area Values
Values in the San Diego area have fallen for seven straight quarters on a year-over-year basis. San Diego values are at approximately the same level as they were in the second quarter of 2004.
In Rancho Santa Fe, sales fell and prices declined. "Buyers have to perceive they are really getting value," said Ann Brizolis of Prudential California Realty in Rancho Santa Fe. "Buyers are patient and will just wait to make an offer until the second or third price reduction. The more pristine homes will shine in this market, but pricing is the key. If there is more downward movement, it won't be substantial. The big hit has already happened."
A smaller pool of buyers was also affecting prices in other luxury communities around San Diego. "Prices are down, rates are low, and as a result, it's actually a great move-up market," said Susan Meyers-Pyke of Coastal Premier Properties in San Diego. "Because of the lack of qualified buyers, supply is high and demand is low."
San Francisco Bay Area Values
Values in the San Francisco Bay Area have fallen for three consecutive quarters on a year-over-year basis. Prices are at about the same level as they were the first quarter of 2005.
In San Francisco, market activity was down sharply in the first quarter. "The buyer pool in San Francisco has shrunk because some don't have the income or assets they once did," said Tom Biss of Sotheby's International in San Francisco. "There are a lot of people on the sidelines, and they aren't in a rush. But all this market is lacking is confidence. In the $3 million to $6 million range, there are a number of houses that have sold quickly."
In Marin County, a steep drop in luxury home sales has impacted price, as well as buyer psychology. "We've seen a shift in buyers from prestige to value," said Mark McLaughlin of Morgan Lane Real Estate in Belvedere. "We're also seeing a bottom forming in this market. We're starting to see stability in price as confidence returns due to positive developments from a macro economic perspective. People are now seeing buyers enter the market, and that is giving others the confidence to purchase a home, too."
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.
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