Luxury home prices rose in San Francisco, San Diego and Los Angeles in the fourth quarter compared with the third quarter, with the Bay Area having the best showing, according to the First Republic Bank Prestige Home Index.
In the Bay Area, luxury home prices rose 1.6 percent from the third quarter and 3.6 percent from the fourth quarter of 2009. The average luxury home in the region is now $2.6 million.
San Francisco-based First Republic Bank (NYSE: FRC) produces the Prestige Home Index every quarter with Fiserv CSW Inc., (NASDAQ: FISV) a provider of automated property valuation services to the financial services industry.
In Los Angeles, luxury homes rose 0.6 percent from the third quarter, but fell 2.2 percent from a year earlier. The average luxury home in Los Angeles is $1.97 million.
And in San Diego, luxury homes rose 0.8 percent from the third quarter and increased 0.6 percent from a year earlier. The average luxury home in San Diego is $1.71 million.
“The fourth quarter of 2010 marked the first time since the second quarter of 2007 that luxury values rose in all three of California’s major metropolitan centers,” said Katherine August-deWilde, president and chief operating officer at First Republic. “The modest increase in the fourth quarter of 2010 was due to low interest rates, a rising stock market and improving consumer confidence.”
The stock market plays a key role in luxury home sales because buyers have so much of their wealth tied to stocks, stock options and private companies whose valuations are often influenced by comparable companies trading in the public markets.
In another sign of the rising confidence among the wealthy, City National Bank's (NYSE: CYN) Bay Area regional executive Robert Brant said this week that investors have a newfound appetite for risk, referencing one potential client focused a few weeks ago on investing in Treasuries coming due over several years now eager to put the money into stocks.
Bay Area real estate agents say buyers are returning to the luxury housing market with greater conviction to seal a deal.
“All of a sudden people have their confidence back,” said Wendy McPherson of Coldwell Banker in Woodside.
David Shepardson of Coldwell Banker in San Francisco said, “We’re off to a good start in 2011. It is shaping up to be a pretty strong year because of low inventory and the fact that there are quite a few buyers out there.”
But he also had a word of caution for home sellers too aggressive in their pricing.
“If the property is overpriced, it will sit there,” Shepardson said.
Olivia Decker of Decker Bullock Sotheby’s International in Mill Valley said the good sales pace from December through February bodes well for the traditionally strong spring selling season.
“The market is definitely much better,” Bullock said.
First Republic says luxury home prices rose in Q4 | Los Angeles Business from bizjournals -Los Angeles-Platinum Triangle-Beverly Hills-Bel Air-Holmby Hills-Sunset Strip-Hollywood Hills-Luxury Estates-Mansions-Celebrity Homes-Homes For Sale-Listings-Realtor-Real Estate – http://www.ChristopheChoo.com
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