SAN FRANCISCO--(BUSINESS WIRE)--Luxury home values increased in San Francisco, Los Angeles and San Diego in the second quarter of 2013 compared to a year ago, according to the First Republic Prestige Home Index™ by First Republic Bank, a leading private bank and wealth management company.
“There is not a lot of product. Overall, it is looking very promising.”
In the second quarter of 2013, the Index indicated the following:
- San Francisco Bay Area values climbed 10.9% from the second quarter of 2012 and 5.0% from the first quarter of 2013. The average luxury home in San Francisco is $2.9 million.
- Los Angeles area values rose 6.1% from the second quarter a year ago and 3.3% from the first quarter of 2013. The average luxury home in Los Angeles is $2.1 million.
- San Diego area values gained 8.0% year-over-year and 4.9% from the first quarter of 2013. The average luxury home in San Diego is $1.7 million.
“This was one of the best quarters in recent history for California luxury home prices in First Republic’s urban, coastal markets,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Limited inventory and growing demand from both U.S. and international buyers are driving the market. Many properties generated multiple offers. It was a very strong quarter.”
First Republic Bank produces the Prestige Home Index each quarter with Core-Logic Case-Shiller, 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 primary residences and vacation homes.
The 10.9% gain year-over year was the largest increase in values since the fourth quarter of 2005. San Francisco values are now the highest since the fourth quarter of 2008 and are approaching the all time highs of 2007.
In San Francisco, the market was strong. “It’s a healthy, solid market. If people want a property, they will pay big numbers for it,” said Val Steele of Sotheby’s International Realty in San Francisco. “We’re seeing very strong demand and a lack of inventory. The luxury market will continue to do well here because San Francisco has it all: It is an international city and we offer great value compared to places like Shanghai, London and Hong Kong.”
In Silicon Valley, there was continued robust demand for luxury homes. “We have two major buyer pools: successful people in the technology business and international buyers from China,” said Ken DeLeon of DeLeon Realty in Palo Alto. “Both groups are quite bullish and many are looking at properties in the $5 million to $10 million range. They feel very confident. You’re beginning to see multiple offers, even in the upper end.”
In the East Bay, the market continued to recover. “The market is definitely picking up,” said Laura Abrams of Coldwell Banker in Orinda. “The high end is moving, but properties are selling at lower prices. People are getting great deals. I am cautiously optimistic.”
Values on a year-over-over basis have now increased for five straight quarters.
On the West Side of Los Angeles, the market was very strong. “In Bel Air, Beverly Hills and Malibu, properties above $5 million were up 10% to 12%,” said Mike Eisenberg of Keller Williams in Los Angeles. “I think we would have a bubble in the making if it were just local buyers, but we’re seeing a lot of multinational investors. Los Angeles values are inexpensive compared to other metropolitan areas around the world.”
Michael Collins of Coldwell Banker Previews in Los Angeles agreed. “If something is extraordinary, it will sell for a premium. People want to be in the Palisades, Brentwood, Bel Air and Beverly Hills, and they will pay up. I’ve never see such astronomical prices in my 27 years in the business.”
In Orange County, pent-up demand was driving the market. “The first and second quarters were excellent,” said Jim Turco of Surterre Properties in Newport Beach. “We had low inventory and high demand. We were seeing multiple offers and deals are being done more frequently.”
The 8% increase year-over-year was the largest since the fourth quarter of 2005, when prices spiked 13.3%.
“Anything up to $3 million is selling quickly, but homes over that price aren’t selling as rapidly,” said Judy Corrente of Pacific Sotheby’s International Realty in La Jolla. “There is not a lot of product. Overall, it is looking very promising.”
Amy Green of Coastal Premier Properties said the market was doing well. “There is more momentum, more transactions, and a lot of cash deals, especially in the high end. It’s very encouraging, compared to last year. There are a lot of move-up buyers and many overseas buyers from Asia and Europe.”
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) is a full-service bank specializing in private banking and private business banking. The Bank's wealth management affiliates offer trust, investment consulting and advisory services. 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, Palm Beach 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. For more information, visit www.firstrepublic.com.