Luxury home values increased strongly in San Francisco, Los Angeles and San Diego in the second quarter of 2014 compared to a year ago, according to the First Republic Prestige Home Index by First Republic Bank, a private bank and wealth management company.
In the second quarter of 2014, the Index indicated the following:
- San Francisco Bay Area values gained 12.2% from the second quarter of 2013 and 4.6% from the first quarter of 2014. The average luxury home in the region is at an all-time high of $3.3 million.
- Los Angeles area values jumped 16.3% from the second quarter a year ago and 2% from the first quarter of 2014. The average luxury home in the area is at an all-time high of $2.5 million.
- San Diego area values were up 9.4% year-over-year and 1.1% from the first quarter of 2014. The average luxury home in San Diego is $1.95 million.
"Luxury home values rose in San Francisco, Los Angeles and San Diego due to robust demand, continued low interest rates and limited inventory," said Katherine August-deWilde, President of First Republic Bank. "In the most desirable neighborhoods in coastal California, luxury properties often sell for over the asking price and with multiple offers. Overall, the market for higher-end homes remains very strong."
First Republic Bank produces the Prestige Home Index each quarter with CoreLogic, 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.
View San Francisco Bay Area Values
San Francisco values jumped 12.2% from the second quarter a year ago and posted their fifth consecutive quarter of double-digit gains on a year-over-year basis.
"The second quarter was extraordinarily strong," said Joel Goodrich of Coldwell Banker in San Francisco. "Almost three-quarters of the homes sold for over the asking price. A large percentage of those properties sold for 10% over the asking price. We also saw an increasing number of foreign buyers."
In Silicon Valley, it continued to be a seller’s market. "From January through April, there were many sales offers over the asking price," said Mia Simon of Redfin in Palo Alto. "Right now, the market has been cooling a bit. We’re seeing three or four offers over the asking price instead of 10."
In the Napa Valley, prices were also higher. "The market is very strong," said Jim Perry of Pacific Union in St. Helena. "The hottest markets are under $2 million and over $5 million. There is very little inventory in every price range. Usually in July and August it is pretty slow, but we’re seeing buyers who can’t find any properties."
View Los Angeles Area Values
Los Angeles prices appreciated 16.3% from a year ago and have posted four consecutive quarters of double-digit gains year-over-year.
"The high end of the luxury market on the West Side of Los Angeles continues to be very robust," said Mary Beth Woods of Coldwell Banker Brentwood West. "Higher priced properties are in great demand. In 2014, the luxury market on the West Side has clearly outperformed 2013."
M. Michele Martin of Teles Properties in Beverly Hills agreed. "There is increasing demand, along with appreciating prices, for luxury homes in prime areas of Los Angeles. More properties are selling for more than the asking price and with more multiple offers than we have seen in a long time."
In beach communities, prices climbed sharply. "I don’t think I’ve ever seen the market this strong," said Barry Host of South Bay Brokers in Manhattan Beach. "You have pressure on the market because of the low inventory and a tremendous number of people wanting to buy homes in these communities."
View San Diego Area Values
San Diego values were up 9.4% year-over-year after three previous quarters of double-digit gains on a year-over-year basis.
The lower end of the luxury market was the most active. "The market is terrific for homes under $3 million, while the more expensive properties are selling more slowly than last year," said Judy Corrente of Sotheby’s International Realty in La Jolla. "People are not buying the big estates in Rancho Santa Fe, but demand is strong for properties at the lower end of the luxury market."
Michael Taylor of Berkshire Hathaway HomeServices in Rancho Santa Fe agreed that the luxury end of the market was tepid. "Between $2 million and $2.5 million, we’re starting to see some inventory shortages, but over $5 million, sales are slower. Through the first two quarters of 2014, we had only four sales over $5 million in Rancho Santa Fe."