‘Red hot’ Bay Area luxury home market sees biggest jump since 2006
Check out this San Francisco Business Times Article. We, Heirloom Design Build, aim on helping you, the homeowners, to create the home of your dreams within your budget. Click here for our project portfolio. We are also on Youtube, Facebook, Twitter, Hometalk, and Houzz.com.
(San Francisco Business Times by Mark Calvey, Senior Reporter, picture from backpage.com)
Don’t be surprised if you hear your real estate agent and mortgage lender suddenly belt out a rendition of “Happy Days are Here Again.”
Luxury home values in the Bay Area and other key California cities are chalking up their biggest gains since the housing boom went bust in the last decade.
Bay Area luxury home values soared 6.6 percent in the second quarter, the biggest year-over-year gain since the first quarter of 2006.
And Bay Area luxury home values rose 2.9 percent from the first quarter of 2012. The average luxury home in San Francisco is now $2.67 million, according to the First Republic Prestige Home Index produced by First Republic Bank and Fiserv CSW Inc. (NASDAQ: FISV)
“We have a hot market right now,” saidJay Costello, president of Hill & Co. in San Francisco. “We’re going to see price increases over the next three to five years.”
Or at least until the Nasdaq makes a U-turn.
Real estate agents point to the strength of the stock market in driving Bay Area home prices since so many of the region’s affluent residents own stocks and options tied to publicly traded companies or private companies that will one day go public or be acquired, or so they hope.
The Nasdaq was approaching an 11-year high this week, thanks largely to shares of Apple (NASDAQ: AAPL) hitting a record high Monday on news of its patent-litigation victory against Samsung.
On the luxury home front, First Republic had more good news. California’s strengthening economy, which first emerged in the Bay Area, is now evident in luxury home values in Los Angeles and San Diego.
Los Angeles values increased 2.4 percent from a year ago and jumped 4.3 percent from this year’s first quarter, marking the biggest quarterly gain since the third quarter of 2005, when the national housing boom was in full swing. The average luxury home value in the L.A. area is now $2.04 million.
In San Diego, luxury home values rose 2.5 percent year-over-year but declined 0.2 percent from the first quarter. The 2.5 percent year-over-year gain was the biggest annual increase since the first quarter of 2007. The average luxury home value in San Diego is now $1.65 million.
“During the first half of 2012, buyers were motivated by a lack of supply and very low interest rates,” said Katherine August-deWilde, president and chief operating officer at San Francisco-based First Republic. (NYSE: FRC)
Those factors were likely drivers in the good showing in the S&P/Case-Shiller index of 20 metropolitan areas, including the Bay Area. The index chalked up its first year-over-year gain in almost two years, when a federal tax credit spurred home buying. The index showed that home prices gained 0.5 percent in June from a year ago, ending 20 consecutive months of decline. Home prices remain down 23 percent from the 2006 peak of the housing bubble, the Wall Street Journal reportedTuesday.
Some of the home buying demand is coming from investor groups focused on acquiring foreclosed properties and renting them. In the Bay Area, Waypoint Homes in Oakland and San Francisco-based Landsmith are among the investor groups seeing opportunity amid the foreclosures.
In the Bay Area, the strength of the luxury housing market was evident aross the region.
“In the second quarter, Palo Alto and Atherton were red hot,” said Ken DeLeon of DeLeon Realty in Palo Alto, where a listing for $5 million can sell in one week over asking.
“Palo Alto is setting all-time highs,” DeLeon said. “For the first time, people are thinking if they don’t buy soon, the market is going to get away from them.”
Or at least for the first time in this boom.
DeLeon anticipates prices will stabilize in the second half of this year, with the market picking up after the first of the year.
The hot market for homes valued at more than $1 million is also apparent in San Francisco and the East Bay.
“It is now common to have multiple offers in all price ranges in all neighborhoods,” said Costello at Hill & Co. “In San Francisco, 40 percent of the properties are selling above the asking, 30 percent are selling at the asking and 30 percent are selling below asking.”
In the East Bay, some home sellers are actually under-estimating the value of their homes as housing recovers.
“The market in Berkeley, Piedmont and the Oakland hills is moving in the right direction,” said Adam Bretta with Highland Partners in Piedmont. “A sense of urgency has come back to the market, particularly among luxury buyers.”
But contrarians might be just as jubilant, looking to Europeans coming back from vacation next week and next year’s tax hikes kicking in here at home.
We are members of the United States Green Building Council, the Atlanta Green Building Council, Builder America, Earthcraft, and Energy Star. We are also EPA- Lead Free trained and certified, and we have LEED (AP) certified staff in house.
Like us on Facebook
Sign up for our blog and Newsletter
More videos on YouTube
Follow us on on Pinterest