San Francisco luxury homes hit record average price of $3.3 million
By Mark Calvey Senior Reporter-San Francisco Business Times
The average luxury home in the San Francisco Bay Area reached an all-time high of $3.3 million, according to First Republic Bank’s Prestige Home Index.
The average Luxury Home in the San Francisco Bay Area reached an all-time high of $3.3 million, according to First Republic Bank’s Prestige Home Index.
In the Bay Area, Luxury Homes values gained 12.2 percent from the second quarter of 2013 and 4.6 percent from this year’s first quarter. The pace marked the 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 percent over the asking price. We also saw an increasing number of foreign buyers.”
While New York often gets the headlines and huge prices when it comes to foreigners buying residential real estate, San Francisco, Los Angeles and Miami are among the U.S. cities enjoying a torrent of cash coming in from around the world as buyers seek to stash capital in the United States. Or as one real estate observer put it, Miami’s Condo boom is a sign of that city’s success in building safe-deposit boxes in the sky.
Back in California, several factors contributed to the robust luxury-home market.
“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. (NYSE: FRC) “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.
San Francisco-based First Republic Bank has tracked Luxury Homes through its Prestige Home Index since 1985. The bank works with CoreLogic, (NYSE: CLGX) a provider of automated-property-valuation services and home-price metrics to financial institutions.
Over the years, what the bank considers a Luxury Home increasingly feels like an upper-middle-class abode in California’s priciest communities. The Prestige Home Index measures changes in homes valued at more than $1 million in key urban markets in California. The homes tracked by the index often have 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 Home 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 the good times roll, cautionary flags fly.
“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.”
Elsewhere in California, luxury home values n Los Angeles and San Diego also climbed.
In the Los Angeles area, Luxury Home values soared 16.3 percent from the second quarter of 2013 and rose 2 percent from this year’s first quarter. Like San Francisco, the average luxury home in the Los Angeles area reached a record high, clocking in at $2.5 million.
In the San Diego area, luxury home values were up 9.4 percent from the second quarter of 2013 and up 1.1 percent over this year’s first quarter. The average luxury home in San Diego costs $1.95 million.
“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.”