Luxury Values Remain Stable in San Francisco; Los Angeles and San Diego Values Continue to Fall

San Diego Values Down 7.8% Compared To Year Ago 


SAN FRANCISCO, Aug. 25  /PRNewswire/ -- Luxury home prices remained flat in San Francisco in the second quarter of 2008 compared to a year ago, but Los Angeles and San Diego continued to decline, according to the First Republic Prestige Home Index(TM) by First Republic Bank, a leading provider of private banking, private business banking and wealth management services.

In the quarter ended June 30, 2008, the Index indicated the following:

-- Los Angeles area values increased 1% from the first quarter of 2008, but fell 3.8% from the second quarter of 2007.  The average luxury home in Los Angeles is now $2.37 million.

-- San Diego area values dropped 2% from the first quarter of 2008 and 7.8% from the second quarter of 2007.  The average luxury home in San Diego is now $2.02 million.

-- San Francisco Bay Area values rose 0.1% from the first quarter of 2008, and were up 0.2% from the second quarter of 2007.  The average luxury home in San Francisco is now at an all-time high of $3.01 million.

"Values of luxury homes throughout California remain under pressure due to increased caution among buyers, although attractive properties in urban markets, desirable suburbs and coastal communities are selling well," said Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank.  "First Republic continues to make jumbo home loans to well- qualified borrowers."

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.

Los Angeles Area Values

Values in the Los Angeles area fell for the second quarter in a row on a year-over-year basis.  Average luxury values are down from a high of $2.46 million set in the second quarter of 2007.

Mary Beth Woods of Coldwell Banker in Brentwood said the best properties continue to sell well, but properties with any perceived issues are generating minimal interest among buyers.  "If the property is not 100% perfect, the buyers are just walking away.  For a home to sell at the asking price, it needs to be a premium property in a premium location and in premium condition."

Agents said there was uncertainty about where the market is headed.  "We have a lack of credit availability," said Bennett Carr of Sotheby's International Realty.  "I don't think the market is going to improve until the credit situation improves."  Carr noted that the market above $10 million was

the strongest, while homes valued between $2.5 million and $5 million had been the most impacted.

San Diego Area Values

Values in the San Diego area have fallen for four straight quarters, both on a quarterly and year-over-year basis.  Average values of luxury homes in the region are down from a high of $2.19 million in the second quarter of 2007.

Amy Green of Prudential California Realty in San Diego said values may weaken further because of growing inventory and limited availability of mortgage credit.  "Super jumbo loans can be difficult to come by."

In Rancho Santa Fe, prices are being reduced and inventory is rising.  "It is a buyers' market, and there is a lot to choose from.  Sellers are more willing to negotiate to make a deal.  I have seen a little more optimism recently, and it feels like we could be turning the corner ever so slightly."

San Francisco Bay Area Values

In the San Francisco Bay Area, values rose to an all-time high of $3.011 million, up from $3.007 million.  Unlike other regions of California, values in the San Francisco Bay Area have recorded only a small decline since 2003.

In San Francisco, agents said the market remains strong for good properties in good locations, with multiple offers and offers over the asking. "Transaction counts are down, but prices are up in the luxury market," said David Papale of Alain Pinel Realtors in San Francisco.  "Homes in the $3 million range are selling briskly.  If the home is priced properly, it is moving very quickly."

Chris O'Connor of McGuire Real Estate in San Francisco agreed and said the scarcity of family homes in San Francisco was keeping prices firm.  "Given the lack of inventory in San Francisco, it's going to be an active market in the second half of 2008.  However, there is more balance in the negotiations between buyers and sellers on both price and terms."

In Palo Alto, a lack of inventory is also driving the market.  "We are seeing some multiple offers when the property is listed at a realistic price," said Beverly Brockway, an agent in Palo Alto.  "There are buyers, but finding good inventory is an issue.  Sales volume is down because there is nothing for sale in reasonable condition at the upper end of the market."

About The First Republic Prestige Home Index

The First Republic Prestige Home Index(TM) 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 Canada 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 http://www.firstrepublic.com/.  First Republic is a division of Merrill Lynch Bank & Trust Co., FSB. 

DATASOURCE: First Republic Bank



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