By Daily Press staff
Los Angeles, San Diego and San Francisco all posted double-digit gains and record highs in the first quarter of 2005 compared to a year ago, according to the First Republic Prestige Home Index™ by First Republic Bank, one of California’s leading providers of full-service banking, investment management and trust services.
The Index, which has tracked luxury homes since 1985, found: ■ Los Angeles values jumped 3.4 percent from the fourth quarter of 2004 to the first quarter of 2005 and rose 23.1 percent from the first quarter a year ago. The average luxury home in Los Angeles is now a record $2 million, up $384,000 from a year ago. ■ San Diego values increased 7 percent from the fourth quarter of 2004 to the first quarter of 2005, and were up 20.4 percent from the first quarter a year ago. The average luxury home in San Diego is now a record $2 million, up $334,000 from a year ago. ■ San Francisco Bay Area values rose 6 percent from the fourth quarter of 2004 to the first quarter of 2005 and gained 13.9 percent from a year ago. The average luxury home in San Francisco is now a record $2.7 million, up $329,000 from the first quarter a year ago.
“In the first quarter of 2005, luxury home values set records in California due to low interest rates, limited supply, continued demand, and the traditional increase in activity this time of year,” said Katherine August-deWilde, chief operating officer of First Republic Bank. “While 2005 is off to a strong start, driven in part by seasonal buying, it is unlikely values will continue appreciating as rapidly as they have over the past few years.”
LOS ANGELES AREA VALUES In Los Angeles, average luxury home values topped $2 million for the first time. The 23.1 percent gain from the first quarter of 2004 to the first quarter of 2005 was the ninth consecutive quarter of double-digit gains on a year-over-year basis.
Real estate agents said the market has remained exceptionally strong due to limited inventory, the desire to live and work in Southern California, and the economic vitality of the region’s booming entertainment industry.
“This is the craziest market I’ve seen,” said Natalie Janger of Sotheby’s International in Beverly Hills. “People have a lot of money, and they feel the housing market is going to continue to be OK. Many buyers don’t want to be in the stock market; they want to be in real estate. It’s pretty amazing.”
In the Santa Barbara area, prices also have been rising sharply due to an influx of buyers from Southern California drawn to the region’s natural beauty and lifestyle.
“Market dynamics haven’t changed: We still have increasing demand for the Santa Barbara coastal region and a finite supply of homes,” said Randy Solakian of Coldwell Banker Previews in Montecito. “Santa Barbara remains a very, very desirable place to live. I don’t see any foreseeable or significant change in that equation.”
In Orange County, the market also is strong, particularly along the coastal communities.
“Everyone wants to be on the water, and the offers automatically come in at full price or better,” said Yvonne Smith of First Team Estates in Newport Beach. “This is also the time of year when the market always picks up. Everyone predicted the market would burst at the beginning of the year, but it didn’t. I think the market is likely to remain about this strong.”
HOW IT’S INDEXED First Republic Bank (NYSE: FRC) 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 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. 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.
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.
Originally published in the Santa Monica Daily Press print edition on June 1, 2005. Read the original PDF.