In another sign of a slowing housing market, luxury home values in three prominent California cities posted small gains in the first quarter, according to the First Republic Prestige Home Index by First Republic Bank.
Los Angeles values rose 0.1 percent from the previous quarter and 12.4 percent from a year ago, with the average luxury home priced at a record $2.29 million, according to the index.
San Diego values increased 0.9 percent from the previous quarter and 6.8 percent from a year earlier, with the average luxury home priced at a record $2.1 million.
San Francisco values were up 1.6 percent from the previous quarter and 8.6 percent from the previous year, with the average luxury home priced at a record $2.92 million.
“In the first quarter of 2006, the value of luxury homes rose modestly in Los Angeles, San Diego and San Francisco as mortgage interest rates continued to rise,” said Katherine August-deWilde, chief operating officer of First Republic Bank. “While the rate of appreciation has slowed considerably from a year ago, the housing market is still strong in all of California’s major metropolitan markets.”
Agents in each of these market areas said the market is returning to a more balanced state after a prolonged period of rapid appreciation.
Despite the slowdown, certain segments of the luxury market remain strong in Los Angeles, according to industry professionals. Steve Frankel of Coldwell Banker Previews Estate Division in Beverly Hills said the market for the most expensive homes in marquee locations remains in demand, but the market has slowed for properties between $1.5 million and $3 million as mortgage rates edged upward.
In Ventura County, Whit Prouty of Prudential California Realty in Sherman Oaks agreed that the lower end of the luxury market has slowed due to rising interest rates, but is still very active overall. “In the second quarter, we’ve started to see a typical increase in business — just like we do every year. It’s still a good market.”