- 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.
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."
