Prices Down Slightly in San Francisco and San Diego Compared To Second Quarter; Values in Los Angeles Remain Unchanged
Luxury home values in Los Angeles, San Diego and San Francisco posted little change in the third quarter of 2010 compared to the second quarter, 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 September 30, 2010, the Index indicated the following:
- Los Angeles area values were unchanged from the second quarter of 2010 and dropped 3.7% compared to the third quarter of 2009. The average luxury home in Los Angeles is now $1.96 million.
- San Diego area values fell 1.1% from the second quarter of 2010 and rose 0.6% year-over-year. The average luxury home in San Diego is now $1.69 million.
- San Francisco Bay Area values decreased 0.8% from the second quarter and were up 1.8% over the past year. The average luxury home in San Francisco is now $2.56 million.
“Luxury home values in the third quarter fell slightly in California’s high-end communities,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Since the beginning of 2010, luxury prices have largely stayed in a narrow range. While buyers have been uncertain about the economy, low interest rates and reduced prices from the peak of the market are generating interest in well-priced properties.”
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, which has tracked luxury homes since 1985, are accessible at www.firstrepublic.com. First Republic Bank is an active lender in the luxury home market for both primary residences and vacation homes.
Luxury home prices in Los Angeles have fallen in 10 of the past 13 quarters.
“Price is driving the market without question, and everyone is reducing their prices,” said Myra Nourmand of Nourmand & Associates in Beverly Hills. “As soon as homes are listed at good prices, they get strong interest. Even if the home is a little above the market price, it will sit. We’re seeing this in the market for $15 million to $20 million homes. These homes are now being bought for $10 million to $15 million.”
Michele Hall of Coldwell Banker’s Brentwood West office agreed that proper pricing strategy is critical. “Buyers aren’t going to pay the prices they once did,” Hall said. “Sellers have to be realistic. A home has to be priced right. Otherwise, you’re not really a seller. You’re just showing your house to a lot of people.”
In Santa Barbara, the luxury market was subdued. “The higher end properties that have sold have been at very large discounts, “ said Jeff Farrell of Coldwell Banker of Montecito. “I am encouraging buyers to make an offer now if they find the right house. The opportunities have never been better. I am also encouraging sellers to list their property now because prices may be higher now than they will be next year.”
Values in San Diego have slipped for two quarters after modest increases in the first quarter of 2010 and the fourth quarter of 2009.
“Over the summer, it was quieter than normal, but activity has picked up in the past three weeks,” said Linda Sansone of Willis Allen in Rancho Santa Fe. “More properties are being shown, more offers are being made and more offers are pending. You usually don’t see this kind of activity at this time of the year.”
Susan Meyers-Pyke of Coastal Premier Properties in Carmel Valley said prices have continued to come down. “The market is softening, and it’s likely that prices will decline slightly more in the luxury market. In this market, buyers are smart and want a good deal. Once a home hits that magic number on price, buyers are ready to move.”
Values in the San Francisco Bay Area declined in the third quarter and have now fallen in 10 of the past 12 quarters.
In San Francisco, lower prices were generating heightened interest among buyers. “Prices have come down to the point where they are becoming attractive,” said Mary Lou Castellanos of Sotheby’s International in San Francisco. “Prices have dropped significantly between 2008 and now, and that decrease is motivating buyers. People are making offers because there is more perceived value.”
On the Peninsula south of San Francisco, buyers appear more serious than they were in the past few months. “Summer was relatively quiet in the high end of the market,” said Monica Corman of Alain Pinel in Menlo Park. “Since October, the market has shown some energy and stability, particularly in the very high end. In the $2.5 million to $4 million range, homes that are well priced don’t stay on the market long. But pricing is key. If a home is listed at 2008 prices, it won’t sell. The price will eventually be reduced.”
In the Napa Valley, reduced prices are also creating buyer interest. “The $4 million to $7 million price range is the sweet spot in the luxury market right now,” said Jim Perry of Pacific Union in St. Helena. “The market from $10 million to $20 million, and under $4 million is struggling. If we do get any positive economic news, this market will take off because people really do want to live here.”
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
Founded in 1985, First Republic Bank and its affiliated companies provide private banking, private business banking and private wealth management. First Republic specializes in exceptional, relationship-based service offered through preferred banking or wealth management offices in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland, Seattle, Boston, Greenwich and New York City. First Republic offers a complete line of banking products for individuals and businesses, including deposit services, as well as residential, commercial and personal loans. More information is available on the Bank’s website at http://www.firstrepublic.com.
About First Republic Private Wealth Management
First Republic Private Wealth Management is the investment management, trust and brokerage group of First Republic Bank. First Republic Private Wealth Management offers objective advice and fully customized solutions with the same level of exceptional client service that has been the hallmark of First Republic Bank for more than 25 years. First Republic has the flexibility to provide individuals, families, businesses, endowments, schools and non-profit organizations with appropriate choices that responsibly meet a client’s specific investment objectives.