California Luxury Home Values Continue to Rise

RISMEDIA, August 23, 2007—Modest year-over-year gains in the second quarter of 2007 increased luxury home values to highs in Los Angeles, San Diego and San Francisco, according to the First Republic Prestige Home Index(TM) by First Republic Bank, a leading provider of private banking, private business banking and wealth management services.

In the second quarter ended June 30, 2007, the Index indicated the following:

    * Los Angeles values rose 1.1% from the first quarter of 2007 and 4.5%
       from the second quarter of 2006. The average luxury home in Los
       Angeles is now a record $2.46 million.

    * San Diego values increased 1% from the first quarter of 2007 and 2.4%
       from the second quarter of 2006. The average luxury home in San Diego
       is now a record $2.19 million.

    * San Francisco Bay Area values increased 2.8% from the first quarter of
       2007 and 2.3% from the second quarter of 2006. The average luxury home
       in San Francisco exceeded $3 million for the first time.

“Luxury home prices in Los Angeles, San Diego and San Francisco rose relatively modestly in the second quarter because of continued demand, a limited inventory and historically low interest rates,” said Katherine August-deWilde, Chief Operating Officer of First Republic Bank. “Year-over-year, increases are moderating, but overall most of California’s luxury home markets remain active.”

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. Historical results of the Index are accessible at http://www.firstrepublic.com.

The Index has tracked luxury homes since 1985.

Los Angeles Area Values

The luxury market in the Los Angeles area continued to remain strong primarily due to the strength of the entertainment industry. Los Angeles luxury home values rose 4.5% from the second quarter of 2006 to a record $2.46 million.

Myra Nourmand, co-owner of Nourmand & Associates, Beverly Hills, said the top tier of the luxury market is as robust as it’s ever been. “The market is still hot in the high end. I just sold a home for $14 million in two days. There is still little inventory at the upper end, and it’s the rule of supply and demand.”

Michele Hall of Coldwell Banker in the Brentwood West office agreed that the high end of the luxury market is strong, but activity is cooling for the rest of the luxury market. “Anything $3.5 million and below is struggling a bit. The inventory is staying on the market longer, unless it is extremely well priced. There are fewer sales, and this has been constant for a year.”

In Orange County, the luxury market remains firm, with homes continuing to appreciate modestly. “Prices are definitely increasing, but not at the rates we’ve seen,” said Donna Wall of Coldwell Banker Previews in Newport Beach. “Sales are down, but prices are up. It’s just taking a little longer to sell a home.”

San Diego Area Values

In the second quarter of 2007, San Diego values continued the pattern of small quarterly increases over the past two years. Prices rose 1% from the first quarter of 2007 and 2.4% from the second quarter of 2006 to reach an all-time high of $2.19 million.

Throughout the region, however, agents said inventory is rising and prices are flattening. “The market has just leveled off and is slowly seeking its own level,” said Chuck Gifford of Coldwell Banker in Rancho Santa Fe. “But if the home is priced right, properties are selling. Buyers just do not want to overpay. Now is actually the time to buy. I haven’t seen it this good since 1993.”

In Rancho Santa Fe, Ann Brizolis of Prudential California Realty said the upper end of the luxury market has slowed significantly in 2007. “Year to date, we’ve had six sales over $7 million, and normally we would see twice that. Prices in the upper end are holding for the time being. The market between $3 million and $7 million is much stronger.”

San Francisco Bay Area Values

In the second quarter of 2007, average luxury values in the San Francisco Bay Area hit $3 million for the first time after remaining flat in the first quarter of the year.

Like Southern California, the high end of the Bay Area luxury market was doing well. “I have great buyers, but there is nothing to buy,” said Gloria Smith of Sotheby’s International in San Francisco.

In the South Bay, the technology industry continues to power the luxury market. “The upper end is doing wonderful — better than ever,” said Benjamin Guilardi of Alain Pinel Real Estate in Los Gatos. “We have an extreme shortage of properties, and we have a very intelligent group of buyers. Once homes of value come on the market, they sell in a month to six weeks. There is also an abundance of listings that are overpriced and they just sit.”

In Marin County, the high end of the luxury market is also strong.

“From $8 million and up, the market is very strong,” said Ingrid Weiss of Pacific Union in Mill Valley. “That market is a world unto its own.”

For more information, visit http://www.firstrepublic.com.

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