FR BK SF : Luxury Home Values Decline in First Quarter of 2011
05/23/2011 | 09:05am
Luxury home values dropped in Los Angeles, San Diego and San Francisco
in the first quarter of 2011 compared to the fourth quarter of 2010,
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 March 31, 2011, the Index indicated the following:
-
Los Angeles area values dipped 0.5% from the fourth quarter of 2010
and slid 0.9% from a year ago. The average luxury home in Los Angeles
is now $1.96 million.
-
San Diego area values fell 4.6% from the fourth quarter and decreased
5.1% year-over-year. The average luxury home in San Diego is now $1.63
million.
-
San Francisco Bay Area values lost 4.3% from the fourth quarter and
were 1.9% lower compared to a year ago. The average luxury home in San
Francisco is now $2.49 million.
"Luxury home prices fell in the first quarter of 2011 in all three of
California's major metropolitan centers," said Katherine August-deWilde,
President and Chief Operating Officer of First Republic Bank. "The
market gains of the fourth quarter of 2010 reversed in the first quarter
of this year. Prices fell as sales activity declined. The combination of
low interest rates and lower prices have made luxury homes in
California's major metropolitan regions increasingly affordable."
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.
Los Angeles Area Values
After rising in the final two quarters of 2010, luxury home prices in
Los Angeles went down in the first quarter of 2011.
However, agents said the ultra high end and beach communities were
largely retaining their value. "In Los Angeles, there have been 20
closed home sales over $10 million year-to-date," said Lisa Platt of
Coldwell Banker in Beverly Hills. "That was the same number as last year
at this time. There are a lot of all-cash buyers. People are also trying
to capitalize on lower interest rates. Shrewd investors see this is as a
good time to get into the market."
Agents agreed that cash deals were on the rise. "Most of the largest
transactions are all cash or almost all cash," said Bennett Carr of
Sotheby's International Realty in Beverly Hills. "They are buying more
house and a better house at a lower price," Carr said. "This is really a
two-part market. The very best properties are holding their value very
well. To the extent a property isn't the best product, prices are
softening. It is also interesting to note that we are seeing more
international investors than ever before."
In ocean communities, quality neighborhoods were experiencing active
interest among buyers. "Demand for property has outstripped the
inventory, even though inventory is higher," said John Capellaro of
Coldwell Banker in Manhattan Beach. "When the right kind of property
comes onto the market, there are often multiple offers."
San Diego Area Values
After rising in the fourth quarter of 2010, values in the San Diego area
fell in the first quarter to their lowest point since the first quarter
of 2004. The average price of a luxury home was then $1.63 million.
Agents in San Diego said a lack of demand was pushing prices lower. "We
still have a lot of inventory in the upper prices points," said Michael
Taylor of Prudential California Realty in Rancho Santa Fe. "Whenever
that happens, you have downward pressure. The good news is that we're a
whole lot closer to inventory equilibrium. Under $3 million, we're close
to equilibrium. Above $4 million, we're still not there yet."
Maxine Gellens of Prudential California Realty in La Jolla agreed. "The
market over $3 million is very slow. There was only one sale in La Jolla
over the past eight months. People seem to be scaling down, no matter
who they are."
San Francisco Bay Area Values
San Francisco Bay Area values in the first quarter fell to their lowest
point since the first quarter of 2004, when the average price of a
luxury home was $2.39 million.
"We weren't surprised that the first quarter was sleepy," said Stephen
Gomez of Gomez & Patton Real Estate in San Francisco. "First quarter
sales reflected the price discounting that took place in the second half
of 2010. Normally, it's a sellers' market in San Francisco, but we had a
buyers' market in final two quarters of last year. Now we're starting to
see the window to the buyer's market close."
On the tech-heavy San Francisco Peninsula, where the economy is
stronger, interest was picking up. "I see tons of buyers with money, but
inventory is the issue more than anything else," said Geoffrey Nelson of
McGuire Real Estate in Burlingame. "We recently had three sales over $5
million. It is probably a better market than sellers think."
In the East Bay, buyers were also hesitant to make offers. "There are
actually a few buyers out there, but they are unwilling to commit," said
Sharon Dare of J. Rockcliff Realtors in Danville. "That drags down
prices. If someone really does want to sell a home, the price is
typically lowered."
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 (NYSE:FRC) and its subsidiaries provide private
banking, private business banking and private wealth management. Founded
in 1985, First Republic specializes in exceptional, relationship-based
service offered through preferred banking or wealth management offices
primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara,
Newport Beach, San Diego, Portland, 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. First Republic is included
in the S&P Total Market Index and Wilshire 5000 Total Market IndexSM.
More information is available on the Bank's website at 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.
Securities Products and Services offered by First Republic Securities
Company, Member FINRA/SIPC.
Blue Marlin Partners
Greg Berardi, 415-239-7826
greg@bluemarlinpartners.com
© Business Wire 2011
