Artisan Luxury Market Report | Winter 2009/2010

Welcome to Our Extended Family
Having A Well-Connected Friend Is Good, But Having A Well-Connected Family Is Golden.

That’s the concept behind The Artisan Group, a collaboration of high profile, independently owned real estate companies located in Northern California and Nevada. This alliance covers eight specific areas, reaching from the picturesque San Luis Obisbo to the beautiful Carmel and Monterey Peninsula north to Napa and Sonoma and from cosmopolitan San Francisco west to the high-alpine environment of Lake Tahoe. By joining together, the individual brokerage firms cast a greater net across California and Nevada, providing their clients with expertise in many areas rather than just one. This collaboration also gives the individual firms an edge over their mainstream competition. The group maintains its personal service and dedication to catering to the luxury market. No matter where customers decide to buy or sell, The Artisan Group will be able to connect them with a professional that specializes in their targeted region.

At the Artisan web site (www.artisangroupre.com), customers can email questions to an Artisan concierge who in turn connects them with an appropriate agent. This customized home-buying strategy assures that customers will be connected with agents that are current on local market conditions and are knowledgeable about the neighborhoods, schools, shopping, zoning, and commuting conditions in their communities. For sellers, the expanded network delivers additional exposure for their property. Rather than just being listed by one firm, the listing will be shared with the family, 7 real estate companies and a network of more than 600 agents.

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Santa Cruz & Surrounding Cities | Bailey Properties

At Bailey Properties we are seeing an increase in upper end activity.The luxury home market in Santa Cruz County is beginning an upward trend. Sellers are learning to be realistic with their sales price and this is attracting potential buyers. Looking at the recent past though tells a different story. In the last 6 months an average of 15 properties priced greater than $1M have been selling each month. There are currently 215 on the market in this price range. Average sales price in this range is $1,687,000 at an average of 123 days on the market. Sellers are now understanding that pricing needs to adjust. There is a market of opportunity for the luxury home buyer. There are many unique and exciting coastal and beach properties currently on the market. The quality homes that are priced competitively are selling, market forces have never been better for the buyer considering a luxury coastal home. The ocean, beach environment and quality of life create a strong foundation for the Santa Cruz area luxury home market. 

Lake Tahoe, Reno & Truckee | Chase International

The Lake Tahoe/Reno market is showing an increase in units sold for this year over last, for the first time in five years indicating an upswing in transactions.  However, typical for the nation, dollar volume is way down from recent years.  The lower end of the market reflects the most activity, with transactions under $500,000 in all of our areas being the most productive.  Good news is an indication that the upper end is showing new life, with a number of closings in the $1 to $5 million category. 

Overall, for the first three quarters, units sold in the Tahoe Basin are up 12%, while dollar volume is down 13% from last year same time.  Truckee dollar volume is down 28% with units sold up 10%.  The Reno-Sparks area is showing a drop in dollar volume of only 1% over last year with an increase in units sold by 41%.  We are starting to see more short sale/foreclosure activity in properties over $1 million and that is expected to continue.  Predictions for California indicate that it will be 2023 before property values reclaim the high level we experienced in recent years.  The Lake Tahoe/Reno communities will always be attractive for those who want more stress-free living in a high energy atmosphere.  Opportunity for selection and great pricing could not be better at this time. 

San Luis Obispo, Avila Beach, Morro Bay & Paso Robles | Patterson Realty

San Luis Obispo County’s economy has not been spared the pain of one of the worst recession in decades.  Despite these tough times, there is a glimmer of light at the end of a dark and gloomy tunnel, local economists say.  The county’s economy which has experienced flat growth for the past four years, will likely see the beginning of a recovery next year as local projects, new retail sites such as the Paso Robles Lowe’s come on line and travelers from other parts of California continue to visit for an affordable escape.  The industries with the greatest losses are construction, real estate, finance and insurance, a result of the housing bubble. We saw median home prices fall by more than $207,400 to just over $379,400 in the second quarter of this year from a peak of $582,900 in the fourth quarter of 2005. Economists predict that growth in the housing market will be slow as a large number of foreclosures are expected to be funneled through the pipeline as moratoriums expire. 

What does this mean for the luxury market?  From January to June of 2009 we had 74 active listings over a $1 Million in our county.  From June to November we have 145 listings over $1Million. The inventory has approximately doubled.  However, the number of closed sales in the same price range increased from 35 to 49.   This still indicates that prices will have to drop and be priced aggressively to be sold.  It is a buyer’s market and if sellers will actually accept the fact that supply and demand drive any real estate market, they will price their homes accordingly.

Diablo, Lamorinda & Tri-Valley Areas | Empire Realty Associates

The upper tier market is showing signs of awakening from its slumber, as jumbo financing products are once again available at low interest rates for qualified buyers. Buyers are taking advantage of these low interest rates combined with a drop in home values. Our buyer profile is both the executive transferee and the local move up buyer, attracted by the excellent schools, picturesque topography, and convenient commuting options. In the first five months of the year, we averaged eight sales per month in the $1.5 million plus bracket. Starting in June, we averaged nineteen sales per month….more than double the sales of the first half of the year! Looking at the towns of Alamo, Blackhawk, Danville, Diablo, Pleasanton, Lafayette, and Orinda, there were a total of 549 sales of single family residences in all price points from January through June 30th with 11% of the sales activity at $1.5 million plus. From July 1st through October 10th, there have been 653 sales; again the $1.5 million plus category comprised 11% of the sold product.

Presently, the highest priced property on the market is an historic Alamo estate built in 1912 on 62 acres priced at $38,000,000. Upper tier properties are currently selling at an average of 93% of list price, average 85 days on the market, and have an average selling price of $2,044,198. There are currently 186 active properties priced at $1.5 plus million, with approximately half of those over two million, and ten properties priced over five million. Comparing sales in 2008 to 2009 in the $1.5 million plus market, there were a total of 241 sales in 2008 versus only 137 sales year-to-date in 2009, with eight of the sales over $3 million. Whether the current upward trend in sales that we experienced the second half of the year will continue remains to be seen.

Oakland, Piedmont & Berkeley | The Grubb Co.

There is definitely some very good news for our local market.  I believe that we have seen a bottoming of Unit Volume of sales as well as a bottoming of prices. 

Unit Sales: Our market is comprised of properties $500,000 and above in the geographic markets of the El Cerrito Hills, Kensington, Albany, Berkeley Hills, Oakland Hills and Piedmont.  We experienced the slowest sales I have ever seen in November and December of 2008 and January and February of 2009, although we are still down 10% in total sales comparing September of 2009 to September of 2007.  The bottom in unit volume was not solely a function of lower demand.  Demand did flag somewhat at the end of the year, but the inventory of properties coming to market was extremely low.

Home Prices: Our overall market really seems to have bottomed in prices in August to September of this year.  Even the Case-Shiller Home Price Index reported a 2.8% price increase during August in the San Francisco Metro area.  The good news is that the Case-Shiller index for San Francisco Metro now stands at 132.47.  That means that prices are still 32.47% higher than in January of 2000. The real surprise is the continued strength in the high end of our market.  Three of the most expensive homes to ever come to market in Oakland have caused quite a stir.  Two of those homes have now gone under contract with list prices of $6,388,000 and $4,850,000.  The third property, a certified “Green” contemporary masterpiece, has just hit the market at $5,500,000!

Perspective and Forecast: Many factors are pointing to a recovery in the Bay Area.  Venture Capital companies invested $2.2B in local startups in the Third Quarter, which is up significantly from the low point reached in the beginning of the year.  The Federal Government just extended the First Time Buyer Home Credit and the Stimulus Jumbo Conforming Loan Limit of $729,750 as both of these programs have been very popular and a real benefit to the housing market.  Interest rates are still low and remain steady.  We are now seeing an abrupt inventory decline.  This is far less alarming to me in November, due to the approaching holiday season, which always marks the end of activity for the year, than it was in February, which is the beginning of the Spring market.  While inventory may be declining, demand is still very strong as evidenced by 64% of our sales in the last 30 days receiving multiple offers pushing prices as much as 16% above asking on homes in prime locations.

San Francisco | Paragon Real Estate Group

The luxury home market in San Francisco -- houses above $2,000,000 and condos above $1,500,000 -- bounced back strongly after crashing in the 5 months after the 9/15/08 market meltdown. Unit sales run about 20 – 30 per month, comprising 6 – 8% of total sales in the city. Luxury houses are concentrated in older prestige neighborhoods such as Pacific & Presidio Heights – where values are highest – followed by the Noe & Eureka Valleys/Ashbury Heights district. Luxury condo sales are concentrated in Pacific Heights, Russian & Nob Hills, followed by the newer South Beach & SOMA neighborhoods.

The largest house sale of the year was a 9-bedroom Pacific Heights mansion sold by a bank pursuant to a foreclosure. It closed at $11,500,000 for $1083 per square foot. The largest condo sale was an unfinished 4800 square foot shell on the 60th floor of the new Millennium Tower in South Beach. It sold at over $9,000,000 for about $1950 per square foot.

In the city, the median sales price for luxury houses is just under $3,000,000, and for condos, just under $2,000,000. The average dollars per square foot are $832 and $983 respectively. The highest dollar per square foot figures are generally achieved by penthouse condos with absolutely staggering views. Luxury home values have fallen by about 15% - 20% since their peak in 2008. Despite the significant pick-up in sales, for every listing that sells, about 1 listing expires without selling, typically due to being perceived as overpriced.

Monterey Peninsula | John Saar Properties Inc.

Several months of slow movement were definitely unwelcomed, but it appears as if the high-end real estate market of the Monterey Peninsula is beginning to once again show some very promising activity. With our beautiful natural surroundings and extraordinary properties, potential luxury home buyers are once again investing in properties on the Monterey Peninsula and Big Sur Coast.

With luxury properties being priced much lower than a year ago, buyers are starting to take advantage of these great opportunities. Towards the end of October we closed escrow on two oceanfront properties totaling over $6 million in sales. Additionally, we have multiple properties in escrow ranging from foreclosures to multi-million dollar properties. Our focus on high-end marketing, along with the world-class properties we represent, have resulted in us being approached by an unusual number of high net worth buyers, including many CEOs, who want to take advantage of finding a great property in this buyer’s market. Our successful passion for marketing oceanfront and other intriguing one-of-a-kind properties are grabbing the attention of these high-profile sellers and buyers.

We currently have 32 properties in the $2,000,000 - $15,000,000 range. These various properties include a 1,119 acre listing in Big Sur, 20 oceanfront properties, and several horse properties. Monterey Peninsula home owners have continued to trust our dramatic marketing and customer satisfaction, even in these hard economic times.

Recent activity in the area has provided for lower average sale prices, but a heavy increase in total sales volume. The average DOM is just under 5 months, due to sellers needing to let go of properties, and buyers taking advantage of the great opportunities.

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