SAN FRANCISCO -- Luxury home values increased strongly in San Francisco, Los Angeles and San Diego in the second quarter of 2014 from a year ago, according to the First Republic Prestige Home Index by First Republic Bank.
The San Diego area values were up 9.4 percent year-over-year and 1.1 percent from the first quarter of 2014, with an average luxury home in San Diego selling for $1.95 million.
"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. "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."
The lower end of the luxury market in San Diego was the most active.
"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."
Michael Taylor, of Berkshire Hathaway HomeServices in Rancho Santa Fe, agreed that the luxury end of the market was tepid.
"Between $2 million and $2.5 million, we're starting to see some inventory shortages, but over $5 million, sales are slower," Taylor said. "Through the first two quarters of 2014, we had only four sales over $5 million in Rancho Santa Fe."
In the second quarter of 2014, San Francisco Bay Area values gained 12.2 percent from the second quarter of 2013 and 4.6 percent from the first quarter of 2014, with an average luxury home in the region at an all-time high of$3.3 million.
Los Angeles-area values jumped 16.3 percent from the second quarter a year ago, and 2 percent from the first quarter of 2014. The average luxury home in the area is at an all-time high of $2.5 million.