California Luxury Home Values Rise Again

Prices Climb Strongly in San Francisco, Rise Modestly in Los Angeles and San Diego

November 20, 2012

SAN FRANCISCO – Luxury home values rose in California’s major metropolitan markets in the third quarter of 2012 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.

In the quarter that ended Sept. 30, 2012, the Index indicated the following:

• San Francisco Bay Area values rose 8.1% from the third quarter of 2011 and gained 2.4% from the second quarter of 2012. The average luxury home in San Francisco is now $2.73 million.
• Los Angeles area values rose 1% from the third quarter a year ago and declined 0.8% from the second quarter of 2012. The average luxury home in Los Angeles is now $2.02 million.
• San Diego area values climbed 2.2% year-over-year and increased 0.8% from the second quarter of 2012. The average luxury home in San Diego is now $1.66 million.

“Luxury home prices were particularly strong in the San Francisco Bay Area during the third quarter of 2012,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “The Bay Area economy is healthy, inventory is limited, and multiple offers are increasingly the norm. Values in Los Angeles and San Diego are rising, and some neighborhoods are experiencing strong demand. Historic low interest rates have resulted in an elevated level of activity in luxury markets throughout California.”

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 primary residences and vacation homes.

San Francisco Bay Area Values

The Bay Area posted its second consecutive quarter of healthy gains on a year-over-year basis. The 8.1% year-over-year increase in the third quarter of 2012 was the highest since the first quarter of 2006.

In San Francisco, agents said the market remains robust. “Prices for luxury homes have been strong all year,” said Malcolm Kaufman of McGuire Real Estate in San Francisco. ”There is limited inventory, the economy here has returned better than anywhere in the country, and employment is up. Lots of money is being spent on $5 million homes and $10 million homes. For some, it feels like 2005 again.”

In Silicon Valley, the market was very strong. “People have secure jobs and stable incomes,” said Pat Kalish of Intero Real Estate Services in Menlo Park. “Except for the highest end of the luxury market, there is strong competition for properties. We have scarcity of homes, historic low interest and an optimistic outlook.  When you are out in the market, you feel the optimism.”

In the Marin County, the market was softer. ”Marin has not seen the increases that have happened in Menlo Park or San Francisco,” said Pat Montag of Decker Bullock Sotheby’s International Realty in Mill Valley.  ”We typically lag a quarter behind San Francisco. We did see an uptick at the end of third quarter in the $3 million to $5 million range. Many people are still waiting until they see what happens in Washington D.C. in the first quarter.”

California Luxury Home Values Rise

Prices Climb in San Francisco, Los Angeles and San Diego Year-Over-Year

August 20, 2012

SAN FRANCISCO – Luxury home values rose in California’s major metropolitan markets in the second quarter of 2012 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.

In the quarter that ended June 30, 2012, the Index indicated the following:

• San Francisco Bay Area values climbed 6.6% from the second quarter of 2011 and were up 2.9% from the first quarter of 2012. The average luxury home in San Francisco is now $2.67 million.
• Los Angeles area values increased 2.4% from the second quarter a year ago and jumped 4.3% from the first quarter of 2012. The average luxury home in Los Angeles is now $2.04 million.
• San Diego area values gained 2.5% year-over-year and declined 0.2% from the first quarter of 2012. The average luxury home in San Diego is now $1.65 million.

“The luxury home market continued to improve in the second quarter, with some neighborhoods experiencing strong price appreciation and accelerating interest from homebuyers,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “During the first half of 2012, buyers were motivated by a lack of supply and very low interest rates.”

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 primary residences and vacation homes.

San Francisco Bay Area Values

In the Bay Area, prices appreciated 2.9% in the second quarter due to the strong economy. The 6.6% price increase compared to a year ago was the largest year-over-year gain since the first quarter of 2006.

Jay Costello, President of Hill & Co in San Francisco, said the market was strong. “In San Francisco, 40% of the properties are selling above the asking, 30% are selling at the asking and 30% are selling below. It is now common to have multiple offers in all price ranges in all neighborhoods. We have a hot market right now, and we’re going to see price increases over the next three to five years.”

In Silicon Valley, the market was also strong. “In the second quarter, Palo Alto and Atherton were red hot,” said Ken DeLeon of DeLeon Realty in Palo Alto. “A listing for $5 million would sell in one week over asking. Palo Alto is setting all-times highs. For the first time, people are thinking if they don’t buy soon, the market is going to get away from them. In the third quarter and fourth quarter, prices should stabilize, but I expect the market to pick up after the first of the year.”

In the East Bay, Adam Betta of Highland Partners in Piedmont said many sellers have been underestimating the resale value of their property as prices start to recover. “The market in Berkeley, Piedmont and the Oakland Hills is moving in the right direction. We’ve seen an increase in activity and buyers. Since January, a sense of urgency has come back to the market, particularly among luxury buyers. There were many buyers sitting on the fence who have jumped in.”

SAN FRANCISCO – Luxury home values declined slightly in Los Angeles and San Francisco, but rose in San Diego in the fourth quarter of 2011 compared to the third quarter, according to the First Republic Prestige Home Index^TM by First Republic Bank, a leading private bank and wealth management company.

In the quarter ended Dec. 31, 2011, the Index indicated the following:

• Los Angeles area values declined 1.8% from the third quarter of 2011 and dipped 0.1% from the fourth quarter a year ago. The average luxury home in Los Angeles is now $1.97 million.
• San Diego area values rose 1.1% from the third quarter but dropped 3.7% year-over-year. The average luxury home in San Diego is now $1.64 million.
• San Francisco Bay Area values fell 0.3% from the third quarter and were down 3.1% from a year ago. The average luxury home in San Francisco is now $2.52 million.

“Luxury home prices in urban, costal markets in California were mostly stable in the fourth quarter,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Low rates, good values and positive economic news have led to increasing interest in home buying in 2012. San Francisco and Silicon Valley, in particular, are likely to benefit from the strength of the technology and social media sectors.”

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 primary residences and vacation homes.

BEVERLY HILLS COURIER – Luxury home values notched modest gains in Los Angeles, San Diego and San Francisco in the third quarter ended Sept. 30 compared to the second quarter, according to an index released today by First Republic Bank.

Los Angeles area values rose 0.7 percent from the second quarter of 2011 and increased 2.5 percent from the third quarter a year ago. The average luxury home in Los Angeles is now $2.01 million, according to the First Republic Prestige Home Index. San Diego area values increased 1.1 percent from the second quarter but fell 3.9 percent year-over-year. The average luxury home in San Diego is now $1.63 million, according to the index. Bay Area values climbed 1 percent from the second quarter and declined 1.4 percent from a year ago. The average luxury home in San Francisco is now $2.53 million.

“Luxury home prices in many California communities increased due to low inventories, low interest rates and home prices that have declined over the past few years. This has improved the economics of investing in residential real estate,” said Katherine August-deWilde, president and chief operating officer of First Republic Bank.

“All three major metropolitan areas in California experienced gains in home prices in the third quarter, which is the first time that has occurred since the fourth quarter of 2010,” she said.

In the Los Angeles area, values have increased in three of the past four quarters. The highest end of the luxury market appeared to be the most robust, according to agents.

“For homes priced at $5 million and up, the market remains active,” said Jane Brill Graven of Coldwell Banker Beverly Hills East. “There are well- qualified buyers who are looking for properties at the very top end, and they have the upper hand. Owners are having to reduce prices to where the market is.”

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Luxury Home Values Rise In Third Quarter Of 2011

Los Angeles, San Francisco And San Diego All Post Modest Quarterly Increases

November 28, 2011

SAN FRANCISCO – Luxury home values rose in Los Angeles, San Diego and San Francisco in the third quarter of 2011 compared to the second quarter, according to the First Republic Prestige Home Index™ by First Republic Bank, a leading private bank and wealth management company.

In the quarter ended Sept. 30, 2011, the Index indicated the following:

• Los Angeles area values rose 0.7% from the second quarter of 2011 and increased 2.5% from the third quarter a year ago. The average luxury home in Los Angeles is now $2.01 million.
• San Diego area values increased 1.1% from the second quarter and fell 3.9% year-over-year. The average luxury home in San Diego is now $1.63 million.
• San Francisco Bay Area values climbed 1% from the second quarter and declined 1.4% from a year ago. The average luxury home in San Francisco is now $2.53 million.

“Luxury home prices in many California communities increased due to low inventories, low interest rates, and home prices that have declined over the past few years. This has improved the economics of investing in residential real estate,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “All three major metropolitan areas in California experienced gains in home prices in the third quarter, which is the first time that has occurred since the fourth quarter of 2010.”

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 primary residences and vacation homes.

In San Francisco and Silicon Valley, the luxury market is strong due to technology-driven wealth creation, lower interest rates and lower home prices. The market also benefitted from higher rents, which further enhances the attractiveness of residential real estate as an investment.

“The higher end market has been pretty strong,” said Hugh Cornish of Coldwell Banker in Menlo Park. “There has been less inventory in the higher end and more from $2.5 million to $5 million. Palo Alto has been the strongest market, followed by Menlo Park and Atherton. We are seeing multiple offers, but not for every property.”

In San Francisco, the higher end of the luxury market was active. “Above $5 million, the market is healthy,” said Mary Lou Castellanos of Sotheby’s International Realty. “Smart money is buying now and is taking advantage of lower prices and lower interest rates. At the same time, a growing number of sellers are getting more realistic about price.”

In the Wine Country, a number of high-dollar sales have taken place over the past few months. “We’re seeing a real surge in the upper end of the market,” said Jim Perry of Pacific Union in St. Helena. “People have been waiting on the sidelines. With interest rates so low and prices down, that’s hard to pass up.”

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 a component of the S&P Total Market Index, the Wilshire 5000 Total Market IndexSM, the Russell 1000®, Russell 3000® and Russell Global indices and six Dow Jones indices.

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 are offered by First Republic Securities Company, LLC -Member FINRA/SIPC. First Republic Securities Company and First Republic Investment Management are wholly owned subsidiaries of First Republic Bank. Unless otherwise disclosed, investments through First Republic Investment Management and First Republic Securities Company, LLC are not FDIC-insured, not bank guaranteed and may lose value.

Media Contact:
Greg Berardi
Blue Marlin Partners
(415) 239-7826
Email Greg Berardi

Luxury Home Values Stable In Second Quarter Of 2011

Prices Rise Modestly In Los Angeles and San Francisco, Fall in San Diego

August 22, 2011

SAN FRANCISCO — Luxury home values rose in Los Angeles and San Francisco in the second quarter of 2011 compared to the first quarter, but declined in San Diego, according to the First Republic Prestige Home Index™ by First Republic Bank, a leading private bank and wealth management company.

In the quarter ended June 30, 2011, the Index indicated the following:

• Los Angeles area values climbed 1.7% from the first quarter of 2011 and increased 1.8% from the second quarter a year ago. The average luxury home in Los Angeles is now $2.0 million.
• San Diego area values decreased 1.2% from the first quarter and fell 6.0% year-over-year. The average luxury home in San Diego is now $1.6 million.
• San Francisco Bay Area values rose 0.6% from the first quarter and were 3.1% lower compared to a year ago. The average luxury home in San Francisco is now $2.5 million.

“Luxury home prices were largely stable in the second quarter of 2011,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Certain communities in California, particularly those in and around the Silicon Valley and parts of San Francisco, showed robust activity. Real estate agents are now reporting that economic uncertainty and stock market volatility are impacting some buyers, despite the all-time low mortgage interest rates.”

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

Los Angeles values rose 1.8% in the second quarter of 2011 from the same period a year ago. The gain was the first on a year-over-year basis in the past 14 quarters.

“The upper end of the market is very strong for well-priced homes,” said David Mossler of Teles Properties in Beverly Hills. “There are four to five buyers for every house. There is very little quality supply. I just sold homes for $7.8 million and $8.6 million to all-cash buyers. If a home is properly priced, demand is very strong. But the home has to be well-priced.”

Charles Pence of Pence Hathorn Silver in Santa Monica said that prices are varying widely by community. “More than ever before, we have highly attractive micro markets with strong activity and price gains, but the surrounding markets can often be flat. This market is driven more by a lack of inventory than anything else. We’ve had some big sales in terms of price. It is hard to predict what someone will pay for something now at the upper end.”

Armen Sarkissian of Prudential California Realty in Pasadena said pricing strategy is key for sellers. “If the price is right, people will buy. There are a lot of buyers for $6 million to $7 million homes, but they are scrutinizing every deal. Because buyers are also concerned about purchasing a depreciating asset, the price has to be below the comparable sales in the past three to six months.”

San Diego Area Values

In San Diego, prices continued a downward trend. On a year-over-year basis, second quarter prices fell 6% compared to the second quarter of 2010.

Mo Loghavi of Prudential California Realty in La Jolla said he expects prices to drop further. “People in the $1.5 million to $5 million want to continue downsizing, but there are no trade-up buyers. We still have another 12 to 14 months of inventory. By the end of 2012, we will see a little more movement, but I haven’t seen the light at the end of the tunnel for the luxury market.”

Farid Khayamian of RE/MAX Associates in La Jolla also said prices may continue to weaken. “In San Diego County, we have roughly 23 months of inventory for homes over $2 million,” he said. “Average supply is about six months. Too much supply and not enough demand for higher end homes will cause prices to soften. Low prices and high inventory are encouraging many investors to make all-cash purchases.”

San Francisco Bay Area Values

San Francisco Bay Area values reversed course in the second quarter, rising 0.6% after falling 4.3 percent in the first quarter of 2011. The strong tech sector in Silicon Valley strengthened the market.

Ken DeLeon of Keller Williams Realty in Palo Alto said the market is very strong. “Palo Alto is still really hot,” he said. “Palo Alto is actually over 2006 prices. Interest is as good as I’ve seen it in 10 years. There was a home in Palo Alto that had 32 offers in the past week. Palo Alto is leading the pack in the surrounding communities. I expect to see Atherton, Menlo Park and Los Altos picking up by spring.”

In San Francisco, the market appeared to be slowing. “The second quarter was starting to look better,” said Joel Goodrich of TRI Coldwell Bank in San Francisco. “We had less inventory and more sales, but that was before the recent stock market volatility. In the second quarter, investor confidence was up in San Francisco, with the high tech boom in Silicon Valley and parts of the city. I’m still very bullish on San Francisco and the Bay Area over the next one to five years, assuming a return to normal economic cycles.”

In Marin County, the luxury market was mixed. “In the mid-range, the market is active,” said Pat Montag of McGuire Real Estate in Tiburon. “I was surprised by the three recent listings that went into escrow in Tiburon and Belvedere between $3 million and $7 million. For homes over $15 million, we’re seeing some significant reductions, but many homes were overpriced.”

SAN FRANCISCO — 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.

Media Contact:
Greg Berardi
Blue Marlin Partners
(415) 239-7826
Email Greg Berardi

SAN FRANCISCO — Luxury home values increased in Los Angeles, San Diego and San Francisco in the fourth quarter of 2010 compared to the third 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 December 31, 2010, the Index indicated the following:

• Los Angeles area values rose 0.6% from the third quarter of 2010 and declined 2.2% from a year ago. The average luxury home in Los Angeles is now $1.97 million.
• San Diego area values gained 0.8% from the third quarter of 2010 and increased 0.6% year-over-year. The average luxury home in San Diego is now $1.71 million.
• San Francisco Bay Area values climbed 1.5% from the third quarter and were up 3.6% from a year ago. The average luxury home in San Francisco is now $2.6 million.

“The fourth quarter of 2010 marked the first time since the second quarter of 2007 that luxury values rose in all three of California’s major metropolitan centers,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “The modest increase in the fourth quarter of 2010 was due to low interest rates, a rising stock market and improving consumer confidence.”

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.

Values in the San Francisco Bay Area posted their third increase in the past four consecutive quarters, although the gains were very modest.

“We’re off to a good start in 2011,” said David Shepardson of Coldwell Banker in San Francisco. “It is shaping up to be a pretty strong year because of low inventory and the fact there are quite a few buyers out there. It’s also apparent very quickly that if the property is overpriced, it will sit there.”

On the Peninsula south of San Francisco, the fourth quarter was unexpectedly strong. “In the past two years, we only had two sales over $6 million in Woodside and Portola Valley,” said Wendy McPherson of Coldwell Banker in Woodside. “In the fourth quarter of last year, we had six sales over $6 million all the way up to $15 million. All of sudden people have their confidence back.”

In the Marin County, the market was also brightening. “This is the year we’re going to see a very good recovery,” said Olivia Decker of Decker Bullock Sotheby’s International Realty in Mill Valley. “We had three months of good sales from December through February. This is encouraging because it is winter, and we’re not even in the spring buying season yet. The market is definitely much better.”

Contact:
Greg Berardi
Blue Marlin Partners
(415) 239-7826
Email Greg Berardi

November 22, 2010

SAN FRANCISCO — 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.

Los Angeles Area Values

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.”

San Diego Area Values

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.”

San Francisco Area Values

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.

Contact:
Greg Berardi
Blue Marlin Partners
(415) 239-7826
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SAN FRANCISCO — Luxury home values in Los Angeles, San Diego and San Francisco were steady in the second quarter of 2010 compared to the first quarter of the year, 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 June 30, 2010, the Index indicated the following:

• Los Angeles area values decreased 1% from the first quarter of 2010 and declined 5.9% compared to the second quarter of 2009. The average luxury home in Los Angeles is now $1.96 million.
• San Diego area values dropped 0.3% from the first quarter of 2010 and fell 2.1% year-over-year.  The average luxury home in San Diego is now $1.72 million.
• San Francisco Bay Area values climbed 1.8% from the first quarter and dropped 1.3% over the past year.  The average luxury home in San Francisco is now $2.59 million.

“Luxury homes in most high-end communities in California held their value in the second quarter of 2010,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank.  “Prices have stabilized since the beginning of the year.  Although buyers are somewhat uncertain due to current economic conditions, low mortgage rates are attracting buyer attention.”

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

The rate of decline decreased in the Los Angeles market compared to the first quarter, as well as the second quarter a year ago.

Kathryn Shafer of John Aaroe Group in Beverly Hills said pricing is even more critical than normal in the current market.  ”There is pent-up demand among buyers,” Shafer said. “If a home is priced well, it will sell.  If it is on the market for 60 days to 100 days, you will see a 10% to 17% reduction in the sale price.  I don’t see any large fluctuations in price either negative or positive for the remainder of the year.”

Barry Host of South Bay Brokers in Manhattan Beach agreed that buyers are demanding properties be priced to reflect current value. “Clients want to see that the properties are priced at or very close to the actual value, or the homes will sit,” he said. “There is a lot of emotion in the market right now about what is going to happen for the rest of the year.”

San Diego Area Values

Values in San Diego dipped slightly from the first quarter, while the year-over-year decline in the second quarter was the smallest in more than two years.

In La Jolla, Rancho Santa Fe and Del Mar, agents said the higher end of the market has been soft.  “Under $2 million, there is a market for sellers, but proper pricing is critical,” said Greg Noonan of Prudential California Reality in La Jolla.  “For homes over $2 million, the market is more challenging.  I’m not convinced it has bottomed out. Buyers will have phenomenal opportunities to find properties at great prices over the next 18 months.”

Peggy Chodorow of Prudential California Real Estate in La Jolla agreed. “We have reasonable activity up to the $2 million range, and virtually nothing over $4 million,” she said.  “Our high end has been hit very hard.  Buyers are not sure whether we are in a recovery or whether we’re going to have a slump for the next three years.  On the other hand, the inventory is sensational. You’ll be hard pressed to find a market with this much choice.”

San Francisco Bay Area Values

Values in the San Francisco Bay Area increased for the second straight quarter.

“As the volume comes back, we’re expecting to see modest appreciation over the next 24 months,” said Mark McLaughlin, CEO of Pacific Union International & Christie’s Great Estates.  “The second quarter was substantially better than what I think the third quarter will be. But it is hard to predict because there has been so much disruption to the market cycle.”

Ana Dierkhising of Hill & Co. Real Estate in San Francisco said affordable loans are stimulating demand.  “Historically low interest rates are keeping buyers in the marketplace.  Buyers are pickier and are deducting for any challenges to the property.  However, they are definitely buying if they feel the property is worth it.  There have been multiple offers in Pacific Heights and Presidio Heights — the places with unique views and one-of-a-kind properties.”

In the South Bay, the market was not as active as in San Francisco.  “As soon as we entered the summer, the markets definitely started to slow,” said Benjamin Guilardi of Alain Pinel Real Estate in Los Gatos.  ”People really do want to act and have the ability to act, but they are paralyzed by uncertainty. We’re not missing wealth. We’re missing confidence.”

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.sfresidence.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.

Contact:
Greg Berardi
Blue Marlin Partners
(415) 239-7826
Email Greg Berardi