California luxury-home values increase in 2005

But price gains slow in fourth quarter
Inman News
Luxury-home values rose to all-time highs in Los Angeles, San Diego and San Francisco in 2005, but appreciation slowed significantly in the fourth quarter, according to the First Republic Prestige Home Index, released today.

The Index, which has tracked luxury homes since 1985, found that Los Angeles values rose 0.7 percent from the third quarter of 2005 to the fourth quarter of 2005 and rose 16 percent for the year. The average luxury home in Los Angeles is now a record $2.29 million, up $316,000 from a year ago.

San Diego values rose 0.7 percent from the third quarter of 2005 to the fourth quarter of 2005 and were up 13.3 percent for the year. The average luxury home in San Diego is now a record $2.09 million, up $245,000 from a year ago.

San Francisco Bay Area values rose 1 percent from the third quarter of 2005 to the fourth quarter of 2005 and gained 13.2 percent for the year. The average luxury home in San Francisco is now a record $2.88 million, up $336,000 from a year ago.

In Los Angeles, the 16 percent increase in 2005 followed a gain of 27.7 percent in 2004, 14.9 percent in 2003, 3.6 percent in 2002, 9.4 percent in 2001 and 8.3 percent in 2000. Since December 2002, the average luxury home in Los Angeles has increased more than $945,000 to almost $2.3 million.

"In 2005, luxury-home values in California appreciated at double-digit rates, although the momentum clearly slowed in the second half of the year," said Katherine August-deWilde, chief operating officer of First Republic Bank, in a statement.

"Continuing demand and limited inventory in some markets may result in increased luxury-home prices in 2006, but at a very modest level compared to the past two years. In markets where inventories spike, values will be impacted," August-deWilde said.

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.