California Luxury Home Values Gain Again in First Quarter of 2005

SAN FRANCISCO, May 25 /PRNewswire-FirstCall/ -- 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(TM) 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% from the fourth quarter of 2004 to the first quarter of 2005 and rose 23.1% 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% from the fourth quarter of 2004 to the first quarter of 2005, and were up 20.4% 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% from the fourth quarter of 2004 to the first quarter of 2005 and gained 13.9% 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."

First Republic Bank 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 http://www.firstrepublic.com/.

Los Angeles Area Values

In Los Angeles, average luxury home values topped $2 million for the first time. The 23.1% 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 okay. 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 have also 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 is also 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."

San Diego Area Values

In San Diego, the market regained momentum in the first quarter of the year after falling 0.7% from the third quarter to the fourth quarter of 2004. Despite one recent soft quarter, San Diego has now recorded five straight quarters of double-digit gains on a year-over-year basis.

Real estate agents said the market is active, but not as robust as the Los Angeles area.

"I see a fairly active market, but it doesn't feel overheated," said Clinton Selfridge of Prudential California Realty in Rancho Santa Fe. "The good properties are selling quickly, but some properties are sitting on the market a bit longer. We're not seeing multiple offers and offers over the asking price. If a property is well-priced, it will go at or about asking price. The market has cooled a little from the frenetic pace, but I think it is more sustainable at these levels."

Steve Leggitt of Sterling Real Estate in Rancho Santa Fe said a lack of inventory and a steady stream of buyers are lifting prices in Rancho Santa Fe and in coastal communities. "The market is extremely good. The only downfall is that we don't have enough inventory. This is probably the best time to sell real estate, but buyers should also exercise caution and conduct their due diligence. Everything that goes up must come down. It's important to know your market well."

San Francisco Bay Area Values

In the San Francisco Bay Area, the market also regained momentum in the first quarter of 2005. Values rose 6% in the first quarter of 2005 after prices were flat in the third and fourth quarters of 2004. Values in the San Francisco Bay Area have now posted five consecutive quarters of double-digit increases on a year-over-year basis. Values have also exceeded the record highs set in the late 1990s and early 2000s.

"We have a spring real estate market, and once again it's supply and demand," said Lea Ann Fleming of McGuire Real Estate in San Francisco. "For many people, it's not just enough to live in San Francisco; they want to own here." She said many sellers are seeing multiple offers from $1 million to $3 million and above. Fleming noted a property recently selling for $4.25 million received an all-cash offer and a three-day close at $4.7 million.

"The first quarter was very strong," said David Gowan at Coldwell Banker TRI in San Francisco. "We saw a lot of activity at $2 million and above. This reminds me of the dotcom time. It's not quite there, but it feels like we're almost back there."

On the San Francisco Peninsula, prices jumped in the first quarter of the year from the fourth quarter of 2004, but a growing supply of inventory will likely keep a ceiling on prices. "In the first quarter, we were replenishing the low inventory, while demand was extremely high. There were multiple offers -- more than 60 percent of the properties received multiple offers. Now if you're a seller, the home has to be perfect and priced more competitively. There is more inventory now, and it is not being sold as quickly."

About The First Republic Prestige Home Index

The First Republic Prestige Home Index(TM) 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. 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 Canada 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, 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.

About First Republic Bank

First Republic Bank is a NYSE-traded private bank and wealth management firm. The Bank and its subsidiaries specialize in providing personalized, relationship-based wealth management services, including private banking, private business banking, investment management, trust, brokerage and real estate lending. As of March 31, 2005, the Bank and its subsidiaries had total Bank assets and other managed assets of $25.25 billion. First Republic Bank provides its services online and through preferred banking offices in seven major metropolitan areas: San Francisco, Los Angeles, Orange County, San Diego, Santa Barbara, Las Vegas and New York City. More information is available on the Bank's Web site at http://www.firstrepublic.com/.