Luxury home values in San Francisco, Los Angeles and San Diego have increased in the first quarter of 2013, compared to the same period a year ago, according to the First Republic Prestige Home Index.

“Luxury home prices rose strongly in the San Francisco Bay Area and Los Angeles, and continued to recover in San Diego. Limited inventory exists in many areas, and buyer demand is accelerating for properties in the most desirable neighborhoods. Many homes have received multiple offers and are selling over the asking prices,” said Katherine August-deWilde, president and chief operating officer of First Republic Bank.

The index reveals that values in the San Francisco Bay Area jumped 8.7 per cent, compared to the first quarter of 2012, and 3.2 per cent from the fourth quarter of 2012. The average luxury home in San Francisco is now valued at $2.82 million.

Los Angeles property values saw a rise of 7.1 per cent from the same period a year ago and 1.9 per cent since the fourth quarter of 2012. The average luxury home in Los Angeles stands at $2.1 million.

Meanwhile, in San Diego luxury home values increased by 2.8 per cent compared to the same quarter last year, and 3.6 per cent from the fourth quarter of 2012. The average luxury home in San Diego costs $1.7 million.

San Francisco in “high demand”

San Francisco values in the first quarter of 2013 were at their highest since the fourth quarter of 2008, and the area’s market returned to levels not seen since the top of the housing boom.  

“The difference between now and then is that there is very little inventory. We have very high demand and many cash buyers. Tech buyers are looking for homes in the $3 million to $6 million range,” said Janis Stone, realtor at TRI Coldwell Banker International Real Estate, San Francisco Bay Area.

Los Angeles “on fire”

Prices in Los Angeles reached their highest level since the third quarter of 2009, rising for four straight quarters year-over-year in the area. In Beverly Hills the market was very active. “The first quarter was on fire,” said Billy Rose of The Agency in Beverly Hills.

“Pricing in the first quarter eclipsed the previous highs, both in price per square foot and total price. The market was driven by real confidence in the economy, foreign buyers and wealthy people who no longer want to hold off buying homes. Pent-up demand and a lack of inventory resulted in true competition in the market,” said Rose.

On the West Side of Los Angeles, the market is also appearing strong, up 15 to 20 per cent compared to a year ago, driven by buyers wanting “hard assets,” as well as interest from European buyers.

San Diego values “strengthen”

Over in San Diego, luxury property values in the first quarter were at their highest level since the fourth quarter of 2010.

Cody Steele of Steele Realty in Cardiff said the market began to strengthen at the start of 2013. “In January and February, it turned into a seller’s market, particularly for homes [priced at] $4 million and under. There is a lot of money moving out of stocks into real estate and other tangible assets. We’ve seen many cash deals,” said Steele.