August 26, 2009

SAN FRANCISCO — Luxury home prices in Los Angeles, San Diego and San Francisco decreased in the second 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 June 30, 2009, the Index indicated the following:

• Los Angeles area values declined 12.4% over the past year and 4.3% from the first quarter of 2009. The average luxury home in Los Angeles is now $2.08 million.
• San Diego area values fell 13.3% year over year and 2% from the first quarter of 2009. The average luxury home in San Diego is now $1.75 million.
• San Francisco Bay Area values decreased 13% over the past year and 3.1% from the first quarter of 2009. The average luxury home in San Francisco is now $2.62 million.

“Luxury home values in California’s urban coastal markets fell sharply in the second quarter of 2009 compared to a year ago,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Many buyers held off on purchases as they waited to see where the market might be headed. However, we also saw an uptick in interest due to improving conditions in the stock market and a realization that luxury values are more attractive now than they have been in many years.”

First Republic Bank produces the Prestige Home Index each quarter with Fisher 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 fallen for the past six quarters on a year-over-year basis. Prices are at approximately the same level as they were in the first quarter of 2005.

Agents said buyers needed to see a clear demonstration of value before making an offer on a home. “The market is confirming a 25% to 30% drop in prices from the highs two years ago,” said Bennett Carr of Sotheby’s International Realty in Beverly Hills. “Although the market is trending down, we are seeing buyers at virtually every price level responding to the opportunity to buy value.”

Agent Leah Lail of Coldwell Banker in Beverly Hills said properties need to be in pristine condition. “It is a buyers’ market, and buyers don’t want anything that needs to be fixed up. They want something turnkey, and they can command it. Buyers who put down 40% to 50% are getting the best deals.”

In the Santa Barbara area, luxury values and sales were also down significantly. “In the first and second quarter, the market was poor,” said Jeff Farrell of Coldwell Banker in Montecito. “In August, we started seeing a big increase in sales in our office. In the latter part of the second quarter, we may have seen some stabilization in prices, but I don’t think we’ll see prices going up in the near future. We could have a long bottom.”

San Diego Area Values

Values in the San Diego area have fallen for eight straight quarters on a year-over-year basis. San Diego values are at approximately the same level as they were in the second quarter of 2004.

In North County, certain parts of the luxury market became more active in the second quarter. “The high end above $2.5 million is picking up dramatically,” said Benny Landman of Coldwell Banker in Del Mar. “A lot of people feel we’re at the bottom of this slide. Many think it is a good time to buy and invest again in real estate.”

In Rancho Santa Fe, high inventory was putting downward pressure on prices. “The luxury market is still soft because there are so many homes for sale,” said Polly Rogers of Prudential California Realty in Rancho Santa Fe. “The market over $5 million is soft, but under $3 million it has picked up. The interest is being driven by pent-up demand, low interest rates and the renewed availability of credit. Buyers think the worst is over.”

San Francisco Bay Area Values

Values in the San Francisco Bay Area have fallen for four consecutive quarters on a year-over-year basis. Prices are at about the same level as they were in the fourth quarter of 2004.

Agents said buyers remain focused on finding properties in move-in condition that are priced to sell. “In the spring, buyers were still extremely cautious,” said Laurie Nierenberg of TRI Coldwell Banker in San Francisco. “If they are going to buy, they expect at least a 10% discount from last year, and they would prefer something turnkey. Sellers need to price their properties realistically. It doesn’t matter how much sellers paid for their homes or what they spent on their renovation. Buyers need to see value in today’s market.”

On the Peninsula, prices appear to have stabilized from the first quarter and sales activity has picked up. “Because a floor has been established, many started to buy in the second quarter,” said Monica Corman of Alain Pinel Realtors in Menlo Park. “In the first quarter, buyers thought prices were coming down further. Prices and interest rates are attractive.”

In the Napa Valley Wine Country, buyers and sellers are in a holding pattern. “The luxury market has been flat,” said Barry Berkowitz at St. Helena Real Estate. “Most of the sellers don’t need to sell, and the buyers don’t need to buy. For the remainder of the year, I still see prices flat and sales slow.”

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 is a private bank and wealth management company offering personal banking, business banking, trust, brokerage and wealth management services. The Bank specializes in delivering personalized relationship-based service through preferred banking or trust offices in ten major metropolitan areas: San Francisco, Los Angeles, Santa Barbara, Newport Beach, San Diego, Las Vegas, Portland, Seattle, Boston and New York City. First Republic offers wealth management services through First Republic Wealth Advisors and First Republic Investment Management. Brokerage services are provided through First Republic Securities Company, LLC, and trust services are provided through First Republic Trust Company. More information is available on the Bank’s website at www.firstrepublic.com. First Republic is a division of Merrill Lynch Bank & Trust Co., FSB.

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

Attached are the 1st quarter results for the First Republic Prestige Home Index, released today. The release and graphs for San Francisco, Los Angeles and San Diego markets are also posted at www.firstrepublic.com.

Thank you,

Linda Farris
Director of Marketing
(415) 296-3702

San Francisco statistics may be seen here.

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.

Here is First Republic Bank’s Third Quarter Report:

California Luxury Home Values Decrease

Los Angeles, San Diego, San Francisco All Post Quarterly and Annual Declines

November 18, 2008

SAN FRANCISCO — California luxury home prices declined in the third quarter of 2008 from a year ago and from the second quarter of 2008, 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 Sept. 30, 2008, the Index indicated the following:

• Los Angeles area values fell 1.9% from the second quarter of 2008 and 4.2% from the third quarter of 2007. The average luxury home in Los Angeles is now $2.33 million.
• San Diego area values dropped 2.1% from the second quarter of 2008 and 7.5% from the third quarter of 2007. The average luxury home in San Diego is now $1.98 million.
• San Francisco Bay Area values declined 0.7% from the second quarter of 2008 and 3.0% from the third quarter of 2007. The average luxury home in San Francisco is now $2.99 million.

“Values of luxury homes declined in the third quarter in response to turmoil in the financial markets and the underlying weakness in the broader housing market,” said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. “Further price declines are likely due to the overall slowdown in the U.S. and global economies.”

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 http://www.firstrepublic.com/. The Index has tracked luxury homes since 1985.

San Francisco Bay Area Values

In the San Francisco Bay Area, values fell to $2.99 million in the third quarter of 2008.

Gloria Smith of Sotheby’s International Realty said most buyers are looking for a bargain before making an offer. ”In the $3 million to $5 million range, there are still some buyers for special properties, but they are looking for a deal. In the $10 million and above range, everyone is looking for a deal. Buyers are willing to wait until prices come down.  At the same time, some sellers are pulling their properties off the market because they believe the current purchase prices are too low.”

In Palo Alto, the market has remained flat, but buyers have growing concerns about the strength of the technology sector in Silicon Valley. “Buyers are concerned about future appreciation when they are thinking about making an offer,” said Ken DeLeon of Keller Williams Realty in Palo Alto. “There has been more trepidation in the market than normal. I anticipate a further slight decline in values for at least the next three months.”

Read the rest of the report here.

We have not been as consistent about posting these press releases from First Republic Bank, but we promise we will from now on. These quarterly reports show just how well San Francisco is doing in the luxury home markets.

Here is an excerpt from the report:

SAN FRANCISCO, May 19, 2008 – Luxury home prices in Los Angeles, San Diego and San Francisco all posted modest declines in the first quarter of 2008, according to the First Republic Prestige Home Index.

• San Francisco Bay Area values dropped 0.8% from the fourth quarter of 2007, but were up 2.9% from the first quarter of 2007. The average luxury home in San Francisco is now $3 million.

They go on to say:

In the San Francisco Bay Area, values fell for the second straight quarter. Despite the decrease, the average luxury home in the region has remained above $3 million for the past 4 quarters. Agents said (sales in) San Francisco, the Peninsula and southern Marin County continued to be robust, while luxury values in suburban communities have been affected the most.

One agent in the artice is quoted as saying, “The luxury market is as strong as ever. Our biggest problem is lack of well-done properties. In the corridor between San Francisco and Silicon Valley, you’re still seeing big numbers because the jobs are there, and the economy is strong.”

- First Republic Bank Press Release

Despite the recent cooling of the real estate market, luxury homeowners remain positive about the market, according to the 2007 Coldwell Banker Previews International® Luxury Survey. A full 56 percent of survey respondents expect the value of their home to increase at least somewhat, and 10 percent expect it to increase significantly, during the next 12 months. Thinking more long term, 36 percent of respondents believe the value of their primary residence to increase significantly over the next five years, while 58 percent believe their residence will increase at least somewhat over that time period. Read more.

“These responses tell us that the affluent truly understand the value in owning real estate,” said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate Corporation. “It is important to remember that in addition to being a home, real estate is a long-term investment, one that can withstand periodic changes in the market.”

The survey also revealed that affluent women are even more optimistic than men. Sixty-one (61) percent of female respondents expect the value of their home to increase somewhat over the next 12 months, compared to 50 percent of male, while both genders remain even at approximately 10 percent in predicting their homes’ value to increase significantly in the next year. Over the long term (five years), 40 percent of female respondents expect the value to increase significantly, compared to 32 percent of male. The sexes come out fairly even (60 percent male, 56 percent female) in forecasting that their homes will increase in value somewhat in five years.

“I’m not at all surprised that women are more positive about their home values than men,” Gillespie continued. “Women continue to comprise a significant segment of the home buying public; in fact, 22 percent of all homes sold last year were to single women. That statistic, together with affluent women’s confidence in real estate, suggests that women may, in fact, be the driver that ultimately helps the market turn the corner.”

David Siroty
Coldwell Banker Real Estate Corporation
973.407.7199
David.Siroty@coldwellbanker.com

Lauren Naru
MS&L
212.468.3040
Lauren.Naru@mslpr.com

In the San Francisco Bay Area, there was no change in values from the fourth quarter of 2006 and values were virtually unchanged from the first quarter a year ago. Agents said luxury home values in the city of San Francisco, along the Peninsula and in Marin County were increasing. There appears to be pent-up demand in these markets, reflected by brisk sales activity for luxury homes in San Francisco and the fact that the median-priced home in Marin County topped $1 million in April for the first time.

“In the $3 million to $5 million range in prime neighborhoods in San Francisco, there is a real shortage of good inventory,” said Steve Gothelf of Pacific Union in San Francisco. “When quality properties pop up and are priced correctly, they fly off the shelf. The reason is that we have an abundance of extremely well-qualified people chasing very few properties. That ratchets up prices.”

On the Peninsula, the market is also very active. “A majority of the deals are generating multiple offers,” said Hugh Cornish of Coldwell Banker in Menlo Park. “We have a strong national and local economy and very little supply of luxury properties. We had half the inventory we normally have in the first quarter.”

In the East Bay community of Lafayette, buyers are clearly being more discriminating. “If something is unique, shows well and is priced right, the property is selling,” said Kim Strand of Better Homes Realty of Lafayette. “In high demand areas with good schools and a history of appreciation, it’s really a normal market. However, in the recent past, you’d have multiple offers. We don’t see that very often. The time to sell is now 30 to 45 days, not a week to 10 days.”

See the statistics here.

- First Republic Bank

It is truly a time for giving thanks. We are fortunate to live in a beautiful and prosperous area of the country. While economies in many other areas of the United States are being hurt by the housing slowdown, California’s markets still seem to be thriving in the metropolitan areas.

After all this talk about the housing bubble, it is nice to see some news to the contrary for a change. Although the marketing times continue to be about 40-60 days in many cases, prices seem to be holding relatively well, with a few exceptions. Yesterday, the California Association of Realtors issued this report that luxury home values in three areas continue to rise… and San Francisco is one of them!

The California Association of Realtors report says, “The value of high-end homes in Los Angeles, San Francisco, and San Diego posted record highs in the third quarter of 2006, according to the First Republic Prestige Home Index™, which tracks homes valued at more than $1 million in key California markets. Despite the record highs, rising inventories and longer sales cycles kept luxury home price appreciation to single digits in all three markets. In Los Angeles, which previously experienced 14 consecutive quarters of double-digit, year-over-year price appreciation, luxury home values increased 4.4 percent to $2.37 million.”

“The values of luxury homes in San Diego and San Francisco also recorded modest gains last quarter, rising 5.4 percent and 4 percent, respectively. According to the index, the average luxury home in San Francisco is now valued at a record $2.96 million, while the average luxury home value in San Diego is $2.18 million.”

Read the First Republic Prestige Home Index™ report here.

- Mick Orton

This article was posted from the California Association of Realtors. They, in turn, quote First Republic Bank’s “Prestige Home Index” report. Here’s what they have to say:
===================================
Luxury home prices in Los Angeles, San Diego, and San Francisco continued to increase during the second quarter of 2006 but at a slower pace, according to the First Republic Prestige Home Index™, which tracks homes valued at more than $1 million in key California markets. In Southern California, sales of homes valued $10 million or higher have remained strong, while sales in the lower- to mid-tiers of the luxury home market have slowed. In San Francisco, the entire market for high-end homes has cooled.

According to the report, the value of luxury homes in Los Angeles edged up 3 percent from first quarter and 12.8 percent compared with the second quarter of 2005. The average value of a high-end home in Los Angeles now stands at a record $2.36 million. The prices of luxury homes in San Diego and San Francisco also recorded gains during second quarter, rising 6.4 percent and 4.8 percent, respectively, from a year ago. The average luxury home in San Diego is $2.14 million, while the average luxury home in San Francisco is valued at $2.93 million.

- C.A.R. Newsline

Here is the link to the latest “Prestige Home Index” report from First Republic Bank which changes periodically. Read the August 16th report below:
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Luxury Home Values Rise in Second Quarter of 2006 Modest Gains in Los Angeles, San Diego and San Francisco

August 16, 2006

SAN FRANCISCO — Luxury home values posted small gains in Los Angeles, San Diego and San Francisco in the second quarter of 2006, according to the First Republic Prestige Home Index™ by First Republic Bank (NYSE: FRC), a leading provider of wealth management and private banking services.The Index, which has tracked luxury homes since 1985, found:

• San Francisco Bay Area values increased 0.3% from the first quarter of 2006 to the second quarter of 2006 and gained 4.8% from a year ago. The average luxury home in San Francisco is now a record $2.93 million, up $134,978 from a year ago.

“Over the past year, the luxury home market in California has transitioned to a more normal, stable market in which properties sell at a more measured and less frenetic pace,” said Katherine August-deWilde, Chief Operating Officer of First Republic Bank. “Luxury home values continue to increase, but at a much slower rate due to rising inventory and interest rates. Homes are being priced more aggressively to sell because buyers have more options.”

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.

In San Francisco, values were up 0.3% compared to the first quarter—the slowest rate of appreciation since the third quarter of 2004. Over the past two years, quarterly increases in the San Francisco Bay Area have been no greater than 6%.

Agents in the San Francisco Bay Area said that well-priced homes in great locations are selling very well, but the market overall has weakened over the past year.

“The market between $2 million and $6 million is really strong because of continuing demand,” said Caroline Kahn Werboff of Hill & Co. in San Francisco. “If the house is priced fairly, you’re seeing multiple offers at or a little over the asking price. Interest rates would have to get up to double digits to make a significant difference.” In the high end of the market, Kahn Werboff said there have been some price reductions. She said some buyers are reluctant because they believe prices will decline.

David Gowan of TRI Coldwell Banker said the market is more balanced, although slower than it has been in recent years. “Instead of selling in two weeks, properties are selling in two months, just like they would in a normal market. What we’ve seen the past six years is unusual.” Gowan said buyers are generally making offers slightly under the asking price.

In San Francisco’s East Bay, the market is slowing. “Over $2 million, our inventory is up and buyers aren’t in a terrible hurry,” said Tara Rochlin of Village Associates in Orinda. “We’re seeing more sellers willing to negotiate and lower their prices. We’re headed toward a more balanced market, which is better for everyone over the long term.”

- First Republic Bank’s “Prestige Home Index” Report