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# LA home prices reach highest levels in more than a decade
- URL: https://www.smdp.com/la-home-prices-reach-highest-levels-in-more-than-a-decade/
- Published: 2003-11-26T16:00:00.000Z
- Updated: 2026-10-23T03:16:39.000Z
- Author: Guest Author
- Tags: Business, Santa Monica, #archive-import

*By Daily Press staff*

The luxury home market in California is heating up, with Los Angeles values rising to their highest levels in 12 years and San Diego homes reaching another record high, according to the Prestige Home Index™ by First Republic Bank, one of California’s leading providers of full-service banking, investment management, and trust services.

In San Francisco, the luxury home market broke a string of three consecutive down quarters and posted a 2.1 percent increase in the third quarter of 2003 — a sign that the market for high-end properties is starting to recover after several years of flat or declining prices.

The Index, which has tracked luxury homes since 1985, found: ■Los Angeles area values climbed 17.1 percent from the third quarter of 2002 and 4.5 percent from the second quarter of 2003\. Los Angeles values are now at $1.53 million — their highest level since 1991\. ■San Diego area values increased 6.9 percent from the third quarter of 2002 and 4.3 percent from the second quarter of 2003\. Values reached $1.52 million — the region’s second consecutive quarterly record. ■San Francisco Bay area values fell 0.4 percent from the third quarter of 2002, but rose 2.1 percent from the second quarter of 2003\. Values in the San Francisco Bay area are still the highest in the state at $2.23 million.

“The Los Angeles luxury home market is booming because of a strengthening economy, low interest rates, lack of inventory and a rising stock market, while San Diego continues the recent trend of strong appreciation,” said Katherine August-deWilde, chief operating officer of First Republic Bank. “In San Francisco, values are beginning to rise, with significant purchasing activity for homes priced up to $2 million. Overall, the luxury home market in California is heating up.”

IN 12 YEARS The third quarter of 2003 marked the third straight quarter of double-digit gains in Los Angeles year over year. Los Angeles values soared 17.1 percent in the third quarter and are at the highest level since 1991, when the average value was $1.6 million.

“The market is as hot as a pistol right now,” said agent Myra Nourmand of Nourmand & Associates in Beverly Hills. “It’s just absolutely insane.” She noted that a property which sold for $12.5 million 2 1/2 years ago is on the market today for $29 million.

“There’s not a lot of product and there are a lot of buyers,” she said. “The number of people moving to Los Angeles keeps growing. People aren’t traveling as much as they did and are therefore willing to spend more money at home.”

Barry Sloane, an agent with Sotheby’s in Beverly Hills agreed.

“In the past two to three months, there’s been an amazing hike in prices,” he said. “There is little inventory, and more buyers than ever.”

Sloane predicted that Los Angeles values would go higher.

“Los Angeles is one of the least expensive cities in the world and has been underpriced for a long time,” he said. “There is genuine demand here and lack of supply. I think the sky’s the limit in LA I’ve always said there is no real estate bubble here.”

Joyce Flaherty, an agent with Coldwell Banker in Beverly Hills, said prices are the highest she has ever seen, and she doesn’t expect the market to cool off any time soon.

“More and more people are coming here, and there are fewer and fewer places to live,” she said. “The biggest problem is a lack of land.”

RECORD HIGH — AGAIN For the second consecutive quarter, San Diego values hit a new high. Values rose to $1.52 million, surpassing the record set in the second quarter of 2003, when values climbed to $1.46 million. Since the first quarter of 2000, values are up more than $400,000\. Agents said despite two record quarters, prices may not appreciate much in the short term. They noted that while the lower range of the luxury market remains active, properties above $3 million are moving slowly.

“It’s paradoxical here in La Jolla,” said Bonnie Adams, an agent with Coldwell Banker in La Jolla. “We have a lot of buyers who have the money, but they haven’t found the right property. Buyers are being very selective, but I think the market is going to continue to remain healthy.”

In the upper end of the market, sales are soft. Linda Sansone, an agent with Willis Allen in Rancho Santa Fe, said 11 homes above $5 million had been sold by this time last year, but only five have sold thus far in 2003\. “The market at $5 million and above is slow, but anything under $2 million is moving along,” she said. “Anything under $1 million can’t stay on the market for a day.”

FALLS SLIGHTLY Values in the San Francisco Bay area fell 0.4 percent from the third quarter of 2002, but rebounded 2.1 percent from the second quarter of 2003, breaking a string of three straight quarterly declines. Despite the slight drop year over year, the market between $1 million and $2 million is hot in the San Francisco Bay area.

“The market under $2 million is really strong,” said David Papale, an agent with Ritchie Hallinan in San Francisco. “We’re seeing multiple offers on properties, and we’re seeing a lot of activity. But above $3 million, buyers are being selective.”

Papale noted that a San Francisco property recently listed for $1.1 million generated 18 offers, including 10 offers over $1.2 million.

“Anything under $2 million is the sweet spot of the market because rates are still very low,” he said.

David Gowan, an agent with Coldwell Banker TRI in San Francisco, agreed that the lower end of the luxury market is becoming the entry point for many move-up buyers, but that premier neighborhoods are still out of reach for many.

“What can you get in San Francisco under $1 million in any decent neighborhood?” he said. “Properties above $2 million that are not well priced are not moving and we are seeing price reductions. I think the market is going to stay flat over the next few quarters.”

In Silicon Valley, buyers are returning, although activity and prices are still far below where they were before the technology bubble.

“The greatest amount of activity is right around $1 million,” said Jennifer DeGolia, an agent with Alain Pinel in Menlo Park. “We’ve even seen some multiple offers at $1.5 million and over. I do really sense that people are getting comfortable with the fact that the economy is recovering. I think we’re going to have a very active quarter.” (The First Republic Prestige Home Index™ is the first statistical model of its kind cus-tomized 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 are properties that are 3,000 to 6,000 square feet, have 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, Case Shiller Weiss 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 November 26, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/112603.pdf?ref=smdp.com)