Here is First Republic Bank’s Fourth Quarter 2008 Report:

Luxury Prices Continue Downward Trend in Los Angeles, San Diego, San Francisco

February 24, 2009

 SAN FRANCISCO — Luxury home prices in Los Angeles, San Diego and San Francisco fell again in the fourth quarter of 2008 compared to a year ago, 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 Dec. 31, 2008, the Index indicated the following:

• Los Angeles area values declined 3.7% in the past year and 0.7% from the third quarter of 2008. The average luxury home in Los Angeles is now $2.31 million.
• San Diego area values fell 8.3% in the past 12 months and 2.2% from the third quarter of 2008. The average luxury home in San Diego is now $1.93 million.
• San Francisco Bay Area values decreased 3.1% in the past year and 1.8% from the third quarter of 2008. The average luxury home in San Francisco is now $2.93 million.

“Luxury home values in California’s urban coastal markets have so far held up better than the overall housing market, although prices are under pressure due to weaker economic conditions, employment losses and declining investment portfolios,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Many buyers are holding off purchases of homes because of uncertainty about property values, while many sellers remain unwilling to reduce prices. Lower sales activity is making it difficult to assess luxury home values.”

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.

San Francisco Bay Area Values

In the San Francisco Bay Area, prices declined for a second consecutive quarter. Since the third quarter of 2007, values have fallen almost 5%. In four of the past six quarters, prices have declined.

In the city of San Francisco, the market for luxury properties remained active. “In Pacific Heights and Presidio Heights, houses in prime condition have been selling for the asking price or right over it,” said Marsha Calegari of Calegari & Associates in San Francisco. “But these properties have to be in excellent condition and well-priced, or they will sit. Overall, there are still enough buyers.”

Chris O’Connor of McGuire Real Estate in San Francisco agreed. “The prime neighborhoods are holding their own. With attractive interest rates and a buyers’ market, it is a golden opportunity to purchase this year. It’s always best to buy during a recession, and we’re in the second year of the recession.”

On the Peninsula, prices and activity appeared to be softer than in San Francisco. “There are people out there with money, but they are taking their time and they are negotiating hard,” said Ethel Green of Intero Real Estate in Los Altos. “There is a window of opportunity for buyers now because they can negotiate again with sellers.”

Read the entire report here.