Luxury home values increased in San Francisco, Los Angeles and San Diego in the fourth quarter of 2013 compared to a year ago, according to a recent home index released by a private bank and wealth management company.
In the fourth quarter of 2013, the Index indicated the following:
• San Francisco Bay Area values climbed 12.4 percent from the fourth quarter of 2012 and 1.8 percent from the third quarter of 2013. The average luxury home in San Francisco is $3.1 million.
• Los Angeles area values rose 13.7 percent from the fourth quarter a year ago and 1.3 percent from the third quarter of 2013. The average luxury home in Los Angeles is $2.3 million.
• San Diego area values gained 16.6 percent year-over-year and 1.3 percent from the third quarter of 2013. The average luxury home in San Diego is almost $1.9 million.
"Luxury home prices again posted double-digit gains on a year-over-year basis in San Francisco, Los Angeles and San Diego," says Katherine August-deWilde, President and Chief Operating Officer of First Republic Bank. "Market conditions in California's luxury communities continue to be very strong. Limited inventory, robust demand and low interest rates are driving prices higher."
San Francisco Bay Area Values
The region experienced its third straight quarter of year-over-year, double-digit gains. Prices are close to an all-time high.
In San Francisco, the market was very active. "Prices continue to rise because there is so little inventory and so much demand," says Mary Lou Castellanos, an agent in San Francisco, Calif. "There are a lot of people who want to buy. The homes that do come to market generate multiple offers and offers over the asking."
The market in Silicon Valley was even stronger. "From Palo Alto to Atherton, we are seeing offers 20 percent to 40 percent over the asking price," says Palo Alto agent Pat Kalish. "It's tech money as well as foreign buyers. From all indications, prices will keep increasing because the inventory is so low. If you're a homeowner, this is one of the best times ever to sell."
In Marin County, the market improved in the fourth quarter. "Going into the end of the year, homes $4 million and above finally picked up," says Pat Montag, and agent in Mill Valley. "Prices are getting close to the peak of the market in 2007. We have very little inventory and that's constraining the market."
Los Angeles Area Values
The region posted its second consecutive quarter of double-digit gains on a year-over-year basis.
"We had a busier-than-normal fourth quarter, despite the holidays," says agent Mary Beth Woods of Brentwood, Calif. "Because there is so little inventory, the buyers swarm when a property comes on the market. Almost 90 percent of the time there are multiple offers, usually over the asking price. This is one of the strongest markets I've seen."
Agent David Mossler in Beverly Hills agrees. "The demand is incredible. It is much stronger than it was in 2006 at the height of the market. Homes that were selling at $10 million in 2005 and 2006 are now $20 million and $25 million. It's astounding."
In Orange County, values also continued to rise. "We saw a dip in sales activity in the fourth quarter, but prices increased," says agent Ron Millar of Newport Beach. "There are plenty of buyers and not enough inventory. Homes at $4 million are selling above their comparables from last year. The attractive properties are generating multiple offers. I see some buyer resistance now and expect the market to level off."
San Diego Area Values
The 16.6 percent increase year-over-year was also the second straight quarter of double-digit gains in the region.
"In Rancho Santa Fe, we're seeing multiple offers and offers over the asking for properly priced homes up to $3 million," says agent Linda Sansone in Rancho Santa Fe. "From $3 million to $5 million, the market is solid, prices are appreciating and supply is tight. For homes $5 million and above, there is plenty of supply, and prices are rising modestly.”
Source: First Republic Bank
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