California Luxury Homes Holding Their Value

Los Angeles And San Francisco Decline Slightly In Fourth Quarter, But Rise
Year-Over-Year

SAN FRANCISCO, Feb. 25 /PRNewswire/ -- Luxury home prices declined
modestly in Los Angeles and San Francisco in the fourth quarter but rose
year-over-year, while San Diego values posted small decreases in the fourth
quarter compared to a year ago, 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 quarter ended Dec. 31, 2007, the Index indicated the following:

-- Los Angeles area values declined 1.2% from the third quarter of 2007
and rose 2.0% from the fourth quarter of 2006. The average luxury
home in Los Angeles is now $2.4 million.
-- San Diego area values fell 1.4% from the third quarter of 2007 and
dropped 1.9% from the fourth quarter of 2006. The average luxury home
in San Diego is $2.11 million.
-- San Francisco Bay Area values decreased 1.7% from the third quarter of
2007 and were up 3.7% from the fourth quarter of 2006. The average
luxury home in San Francisco is $3.03 million.

"Luxury home prices in California weakened in the fourth quarter, but they
are holding their own on a year-over-year basis," said Katherine
August-deWilde, President and Chief Operating Officer of First Republic Bank.
"At the high end of the luxury market, demand remains quite strong, while
buyers at the lower end are being more selective. Overall, prices in Los
Angeles, San Francisco and San Diego have remained firm due to a lack of
inventory and the desirability of luxury neighborhoods."
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
Values in the Los Angeles area are down from a high of $2.46 million in
the second quarter of 2007. The 1.2% decline in the fourth quarter of 2007
was the region's second consecutive quarterly drop. In December 2006, the
average value of a luxury home in the Los Angeles area was $2.35 million.
On the West Side, the higher end of the luxury market remained strong. In
2007, the number of home sales over $5 million totaled 261, up from 211 in
2006, according to Joyce Flaherty of Coldwell Banker in the Beverly Hills
South office. Sales in 2008 are already running ahead of last year's pace.
"People who have a tremendous amount of money don't care about the market, and
they're buying," Flaherty said. "As long as it is fairly priced, properties
are selling. A $22 million property recently sold within a week."
Anita Rich of Keller Williams in Sherman Oaks said that the lower end of
the luxury market is holding up much better than it was two months ago.
"People have realized that the bottom isn't going to fall out," Rich said.
"More people are now focused on buying. I'm seeing more stability in the
market, and I see attitudes improving among buyers and sellers."
In Orange County, the market is also active, although inventory levels are
modestly higher. "We continue to see strength in the high end of the market,"
said Cari Young of HOM Real Estate Group in Newport Beach. "We've seen some
of the largest sales ever, both this year and at the end of last year. We
just haven't seen a significant drop in prices in the coastal areas and more
desirable communities."
San Diego Area Values
Values in the San Diego area are down from a high of $2.19 million in the
second quarter of 2007. The 1.4% drop in the fourth quarter was the region's
second consecutive quarterly decline. In December 2006, the average luxury
home was $2.15 million.
Despite the declines, some agents said the market has not fallen
substantially. "We're not seeing wholesale price reductions," said Lucy
Kelts, Prudential California Realty in Rancho Santa Fe. "If something is
listed fairly, there is room to negotiate and make good deals. Inventory is
also shrinking and builders are not breaking ground on any new projects. When
the inventory levels out, buyers who have been waiting may not find a lot to
choose from."
In northern San Diego County, the market has slowed somewhat, but interest
in beach properties remains high. "There are a lot of buyers with the means
of buying second homes, and they want real estate close to the ocean," said
Wendy Ramp of Prudential California Realty in Del Mar. "Homeowners can walk
to everything they want in Del Mar -- restaurants, beach and shopping. That's
why it remains so attractive."
San Francisco Bay Area Values
In the San Francisco Bay Area, values decreased 1.7%, the first quarterly
decline since the fourth quarter of 2006, when average luxury values were
$2.92 million. The region's luxury values surpassed the $3 million mark for
the first time in the second quarter of 2007. However, inventories are low
for high-end properties in the City and parts of Marin and the Peninsula,
where values remain strong.
Agents said demand for luxury homes remains high in San Francisco, even
though values have softened in areas outside of the City. "The market is just
very strong," said Richard Weil of Hill & Co. in San Francisco. "We don't
have any inventory. It comes down to that." Weil said homes between $3
million and $5 million are taking a little longer to sell, but demands for
properties above $6 million have been largely unaffected by the downturn
affecting the rest of the housing market.
On the Peninsula, the luxury market remains strong in some high-end
communities. "In the past few weeks, we've had some phenomenal sales in
Atherton and some very large sales in Woodside," said Sue Crawford of Coldwell
Banker in Menlo Park. "People with money aren't as impacted by what's
happening with interest rates."
In Marin County, the upper tier is stronger than the lower end of the
luxury market. "The volume of sales has slowed somewhat in the past three
months," said Tracy McLaughlin of Morgan Lane Real Estate in Ross. "Wall
Street's undulations have made the luxury market a little more tenuous."
About The First Republic Prestige Home Index
The First Republic Prestige Home Index(TM) is the first statistical model
of its kind customized to measure changes in homes valued at more than $1
million in key California urban markets. Some common features of luxury homes
in the Index: 3,000 to 6,000 square feet, three to six bedrooms, and three to
six bathrooms. San Francisco Bay Area properties include a cross-section of
luxury homes in Alamo, Atherton, Belvedere, Danville, Healdsburg,
Hillsborough, Lafayette, Los Altos, Los Gatos, Mill Valley, Moraga, Orinda,
Palo Alto, Piedmont, Portola Valley, Ross, St. Helena, San Francisco,
Saratoga, Sonoma, Tiburon and Woodside. Properties in Los Angeles represent a
cross-section of luxury homes in Arcadia, Beverly Hills, Calabasas, La Canada
Flintridge, Encino, Los Angeles, Malibu, Marina del Rey, North Hollywood,
Pacific Palisades, Pasadena, Playa del Rey, Santa Monica, Studio City and the
West Los Angeles enclaves of Bel Air, Brentwood and Westwood. San Diego
properties represent a cross-section of luxury homes in Carlsbad, Coronado,
Del Mar, Encinitas, La Jolla, La Mesa, Poway, Rancho Santa Fe, San Diego and
Solana Beach. In producing the Index, Fiserv CSW Inc. draws upon its economic
database and years of experience in tracking single-family home values;
collects and cross-checks data from multiple sources; achieves a weighted
balance of validation elements such as repeat sales, comparable sales, and
physical home characteristics; and combines this with First Republic's
extensive local market knowledge.
About First Republic Bank
First Republic Bank is a private bank and wealth management company
offering personal banking, business banking, trust, brokerage and wealth
management services. The Bank specializes in delivering personalized
relationship-based service through preferred banking or trust offices in ten
major metropolitan areas: San Francisco, Los Angeles, Santa Barbara, Newport
Beach, San Diego, Las Vegas, Portland, Seattle, Boston and New York City.
First Republic offers wealth management services through First Republic Wealth
Advisors and First Republic Investment Management. Brokerage services are
provided through First Republic Securities Company, LLC, and trust services
are provided through First Republic Trust Company. More information is
available on the Bank's website at http://www.firstrepublic.com. First
Republic is a division of Merrill Lynch Bank & Trust Co., FSB.
SOURCE First Republic Bank

Greg Berardi of Blue Marlin Partners, +1-415-239-7826,
greg@bluemarlinpartners.com, for First Republic Bank