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Luxury homes in San Francisco Bay Area record big gains

November 28, 2012

Our agent on the ground, SFhotlist founder and Zephyr real estate agent Danielle Lazier, attended First Republic Bank's holiday luncheon this week.  In the opening remarks, the bank addressed the performance of the San Francisco Bay Area luxury homes market in their recently released Prestige Home Index.  The small group of realtors also had the pleasure of hearing Ken Rosen,Chair of the Fisher Center for Real Estate and Urban Economics at UC Berkeley,  speak on the topic "Economic and Housing Update: Will the Recovery Continue?". (Briefly, Rosen believes buyers need to take advantage of the historically low interests rates right now - they will not last forever or even much after Bernanke's current term).

What caught our attention was the Bay Area's strong showing in the Prestige Home Index compared to past quarters and compared to the two other California metropolitan areas tracked in the index.

The First Republic Prestige Home Index shows that San Francisco Bay Area* luxury homes gained 8.1 percent year-over-year (this increase is the highest since the first quarter of 2006) and 2.4 percent from the second to third quarter of 2012. What defines a "luxury" home in terms of this index? The index represents a cross-section of homes valued at $1 million or more. The average value of a luxury home in San Francisco is $2.73 million.

Compared to the two other California metropolitan markets included in the Prestige Home Index, Los Angeles and San Diego, San Francisco has the largest gains YOY and from the second quarter of 2012.  The brief post on SocketSite has some interesting information.  According to SocketSite, "The [San Francisco] index remains down 11.3 percent from a third quarter 2007 peak but is back to first quarter 2005 levels, up 9.8 percent from the current cycle bottom which occurred in the first quarter of 2011 at which point the index was down 19.2 percent from its peak.".  This is good news even if this segment of the market is still down from the 2007 high.

 

First Republic Bank's Prestige Index San Francisco

 According to the report released by First Republic Bank:

In the quarter that ended Sept. 30, 2012, the Index indicated the following:

San Francisco Bay Area values rose 8.1% from the third quarter of 2011 and gained 2.4% from the second quarter of 2012. The average luxury home in San Francisco is now $2.73 million.

Los Angeles area values rose 1% from the third quarter a year ago and declined 0.8% from the second quarter of 2012. The average luxury home in Los Angeles is now $2.02 million.

San Diego area values climbed 2.2% year-over-year and increased 0.8% from the second quarter of 2012. The average luxury home in San Diego is now $1.66 million.

*The First Republic Prestige Home Index for San Francisco is defined as "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."  While this is a wide swathe of Bay Area cities with different micro-economic and real estate climates, we believe the statistics still remain relevant for San Francisco proper.  We at SFhotlist like these numbers.

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