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Prestige Home Index™
Luxury Home Values In California Decline
Los Angeles, San Diego, San Francisco Experience Double-Digit Decrease
November 24, 2009
SAN FRANCISCO — Luxury home values in Los Angeles, San Diego and San Francisco continued to fall in the third 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 Sept. 30, 2009, the Index indicated the following:
- Los Angeles area values declined 12.7% over the past year and 2.2% from the second quarter of 2009. The average luxury home in Los Angeles is now $2.03 million.
- San Diego area values dropped 14.8% year over year and 3.8% from the second quarter of 2009. The average luxury home in San Diego is now $1.68 million.
- San Francisco Bay Area values decreased 15.7% over the past year and 3.8% from the second quarter of 2009. The average luxury home in San Francisco is now $2.52 million.
"Luxury home prices in California's urban coastal markets continued to fall in the third quarter," said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. "While there has been increased activity in some neighborhoods and more people are looking for opportunity, demand remains weak because most buyers continue to hold off until they are confident the market has stabilized."
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 declined for the past seven quarters on a year-over-year basis. Prices are at approximately the same level as they were in the first quarter of 2005.
On the West Side of Los Angeles, prices and activity have been falling. "The lowest point in recent memory in the luxury marketplace in Santa Monica, Brentwood and Pacific Palisades occurred in the past quarter," said Charles Pence of Pence Hathorn and Silver in Santa Monica. "Slightly more properties have been taken off the market in the past two years than have sold. Inventory is down and most of what is left is overpriced."
In Beverly Hills, sales activity has improved from the first half of the year, but remains low. "Sellers are adjusting prices a bit, and buyers are getting good value, so they are moving forward," said Joyce Rey of the Previews International Division of Coldwell Banker in Beverly Hills. "Buyers definitely want a bargain, and they are very cautious. We’re also seeing quite a bit of foreign buyers because of the weak dollar. Overall, I think prices are going to stabilize over the next six months."
In Santa Barbara, the market is slowly coming back. "The third quarter was definitely a better market than the second quarter, but it is not what I would call a good market," said Randy Glick of Prudential California Realty in Santa Barbara. "Sellers are starting to get a little more educated about price. Once buyers realize the market isn’t as bad as it was and it isn’t going to get worse, they are going to jump back in, but not without caution."
San Diego Area Values
Values in the San Diego area have fallen for nine straight quarters on a year-over-year basis. San Diego values are at approximately the same level as they were in the first quarter of 2004.
High inventory continued to depress prices throughout the region. "When the imbalance between supply and demand is so out of whack as it is now, prices fall," said Michael Taylor of Dougherty & Taylor at Coldwell Banker in Rancho Santa Fe. "Until inventory comes down to a four-month supply, you don’t have a stable market. In most of the luxury markets in San Diego, there is a two- to six-year supply right now."
Agent Chuck Gifford of Coldwell Banker in Rancho Santa Fe agreed that the market is tenuous. "I don’t think we’ve hit the bottom of the market yet in San Diego. That may occur in the first quarter of 2010. Then we may see some relief. What’s happening here is total insanity."
San Francisco Bay Area Values
Values in the San Francisco Bay Area have slid for five consecutive quarters on a year-over-year basis. Prices are at about the same level as they were in the third quarter of 2004.
In San Francisco, prices continued to decrease, although interest in the highest end of the luxury market picked up a bit after a long period of inactivity. "For the right property, there is pent-up demand, but the home must have a view and a high-quality renovation," said Val Steele of Sotheby's International Realty in San Francisco. "There has to be something special about the property."
On the Peninsula, the market continued to deteriorate. "The prices are continuing to come down," said Wendy McPherson who manages Coldwell Banker offices in Woodside, Atherton, Menlo Park and Palo Alto. "The higher priced the home, the worse it gets. We still have a ways to go. Buyers looking at homes over $4 million are just sitting back and waiting."
In the East Bay communities of Alamo and Danville, sales activity has been very low, but is starting to improve. "Any home at $2.5 million and above is a difficult listing," said Joy Pratt of Empire Realty Associates in Danville. "I do see the market improving, but it won’t be the steep upward curve we’ve seen in the past."
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 provides private banking, private business banking, and private wealth management, including brokerage and trust services. First Republic serves ten metropolitan areas: San Francisco, Los Angeles, Santa Barbara, Las Vegas, Newport Beach, San Diego, Portland, Seattle, Boston, and New York City. More information is available on the Bank’s website at www.firstrepublic.com. First Republic Bank is a division of Bank of America, N.A.
Contact:
Greg Berardi
Blue Marlin Partners
(415) 239-7826
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