Northern California’s High-End Housing Market Shows Signs of Stability In One Segment While Another Market Segment Dips Slightly

Posted by Gary Marsh — October 29, 2006

October 23, 2006 -- Saratoga, Calif. – Sales of high-end and luxury-priced homes in the seven counties of Northern California served by Alain Pinel Realtors and the company’s 1,200+ sales professionals appear to be on divergent paths, with real estate sold and listed for sale above $2.5 million holding its own while home sales dipped slightly and listings continued to increase with properties priced between $1.5 million to $2.499 million, according to the Distinctive Homes & Estates third quarter report by Alain Pinel Realtors. Based on public records researched from the leading multiple listing services in San Francisco, San Mateo, Santa Clara, Santa Cruz, Monterey, Contra Costa and Alameda counties, overall units of homes sold above $2.5 million in the third quarter totaled 214 homes, compared with 210 homes sold in the same period a year ago – July 1 to September 30. Sales volume declined from $715.18 million for the 210 homes in the third quarter 2005 to $679.33 million this year, a modest 5 percent decrease. That is similar to the second quarter performance this year, when 216 homes sold in the seven counties for more than $2.5 million and the overall volume dropped 5.5 percent compared with the second quarter 2005. At the $1.5 million to $2.499 million level, 645 homes sold in the seven counties in the third quarter this year, a substantial 23 percent drop compared with 840 homes sold in that price range in the third quarter 2005. Sales volume fell from $1.543 billion to $1.183 billion, which was also a decline of about 23 percent. This follows a weak second quarter at this price range, when 955 homes sold in the seven counties last quarter compared with 1,074 homes sold in that price range in the second quarter 2005 (an 11.5 percent drop). Sales volume fell from $2.435 billion in the second quarter 2005 to $2.223 billion in the second quarter 2006 for a decline of 8.75 percent. While the figures at the $2.5 million and greater level were comparable on a year-to-year basis and even from the second quarter this year to the third quarter, market data of homes sold from $1.5 to $2.499 million suggests a difference between the high-end market and what many consider to be the luxury market, or homes sold and listed at $2.5 million or greater. “The high end market was bifurcated this quarter and it appears the market correction has affected the bottom portion of the high end but not necessarily the upper reaches of property sales and inventory, which is steady and apparently less vulnerable to current market dynamics,” said Alain Pinel’s Vice President of Marketing Ginny Cain-McMurtrie. She added “for a long time we have suspected that the sale of homes in the $1.5 million to $2 million are more likely to mirror the performance of the median home sales market and this data tends to reinforce that notion. However, I would caution that one quarter does not constitute a long-term trend.” Inventory of homes for sale above $2.5 million climbed from 740 at the close of the third quarter 2005 to 851 homes on Sept. 30 this year, a 15.2 percent increase. Inventory also increased in the seven counties overall for homes listed for sale from $1.5 million to $2.499 million, rising from 1,029 a year ago to 1,156 at the close of the third quarter 2006 – a 12 percent spike. By comparison, inventory changes were more modest in the second quarter this year, increasing just 3.8 percent for homes listed above $1.5 million versus the second quarter of 2005 and actually decreasing 2.2 percent for homes listed at greater than $2.5 million, compared with the same period a year earlier. The data is a compilation of information provided to members of the multiple-listing services that serve Realtors in the region (SFMLS, REINFO and MAX-EBRD). For a county-by-county analysis of homes sold and listed for sale at the benchmark rates of $1.5 million and $2.5 million, please read the balance of the report. Distinctive Homes & Estates Market IndexSource: Alain Pinel Realtors and TrendGraphix Third Quarter 2006 Sales Performance DH&E marketplace Seven Northern California Counties Santa Clara County At $2.5 million and greater in Santa Clara County, the same number of homes sold during the period – 53, as in the third quarter 2005 and the median sale price was constant, too, at $3 million per home. Inventory increased 5.37 percent from 242 homes for sale at the end of the quarter 2005 to 255 homes for sale as of Sept. 30 this year. The spike in inventory at the $1.5 million to $2.499 million level was greater – almost 12 percent, with 347 homes for sale in this price range at the end of the recent quarter, versus 310 homes listed for sale a year earlier. Sales activity slowed, declining 21 percent on a year-to-year basis, with 241 homes sold in the period compared to 305 in the third quarter 2005. The highest- priced home sold was $6.5 million, in Palo Alto. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $175,128,001Units Sold: 53Highest Price: $6.5 millionPeriod 3Q 2005Total Sold: $183,219,580Units Sold: 53 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 347Listed Median: $1,875,000Units Sold: 241Period 3Q 2005Listed: 310Listed Median: $1,950,000Units Sold: 305 San Mateo County San Mateo, the region’s wealthiest county as measured by property sales at the high end, experienced a surge in inventory at both benchmark levels monitored by Alain Pinel Realtors. Homes listed for sale at $2.5 million or greater jumped 24.62 percent, with 162 available Sept. 30 2006 versus the same date in 2005, when 130 homes were on the market. At $1.5 to $2.499 million, inventory climbed almost 13 percent – from 124 homes for sale at the end of the third quarter 2005 versus 140 homes for sale this year. Sales slipped at both levels, too. For the recent quarter, 135 homes sold at the $1.5 million-plus range compared with 172 for the same period a year ago – a 21.5 percent decline. At $2.5 million or greater, 51 homes sold in the recent quarter versus 59 a year earlier, for a 13.6 percent drop. The highest-priced home sold was $7.4 million, in Atherton. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $190,069,624 Units Sold: 51 Highest Price: $7.4 millionPeriod 3Q 2005Total Sold: $233,521.032 Units Sold: 59 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 140Listed Median: $1,850,000Units Sold: 135Period 3Q 2005Listed: 124Listed Median: $1,950.000Units Sold: 172 Alameda County Unit sales in Alameda County were off 25 percent at the $2.5 million or greater level during the third quarter versus the same period a year ago – 15 compared with 20, while fewer homes were also sold at the $1.5 million to $2.499 million level in the quarter, falling from 87 for the third quarter 2005 to 68 in the recently closed quarter, a 21.84 percent decline. Changes in inventory were relatively minor, with just a 6 percent increase at the $1.5 million-plus range (123 in the recent quarter versus 116 a year earlier) and a slight bump of 7.14 percent for homes priced $2.5 million and greater – 60 currently compared with 56 at the close of the third quarter in 2005. The highest-priced home sold was $6.45 million, in Fremont. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $51,970,320Units Sold: 15Highest Price: $6.45 millionPeriod 3Q 2005Total Sold: $67,341,765Units Sold: 20 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 123Listed Median: $1,798,000Units Sold: 68Period 3Q 2005Listed: 116Listed Median: $1,799,000Units Sold: 87 Contra Costa County Inventory of high-end and luxury properties increased more in Contra Costa County during the third quarter this year than any of the seven counties tracked by Alain Pinel Realtors, with a 46.26 percent increase in available homes from $1.5 million to $2.499 million (215 currently vs. 147 a year earlier) and a 28.13 percent increase on a year-to-year basis for homes listed for sale above $2.5 million (82 currently vs. 64 a year earlier). There was a significant decline in unit sales above $1.5 million to $2.499 million also, from 134 during the third quarter 2005 to 88 for the recently ended quarter – a 34.33 percent drop. At the luxury level of $2.5 or greater, however, sales were stable by comparison, with 24 sold in the quarter versus 23 in the same period a year earlier. The highest-priced home sold was $9.9 million, in Lafayette. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $81,380,000Units Sold: 24Highest Price: $5.55 millionPeriod 3Q 2005Total Sold: $73,879,000Units Sold: 23 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 215Listed Median: $1,775,000Units Sold: 88Period 3Q 2005Listed: 147Listed Median: $1,779,000Units Sold: 134 San Francisco County Of the seven counties tracked by Alain Pinel Realtors, San Francisco County had the greatest increase in unit sales of homes priced above $2.5 million, with 27 homes selling in the third quarter this year compared with the same period a year earlier when 18 homes sold at this level – a 50 percent increase. However, fewer homes priced from $1.5 to $2.499 million sold in the period, with 51 homes sold in this range versus 64 during the same quarter a year earlier – a 20 percent decline. Inventory increased modestly overall in the county during the third quarter, rising about 23 percent in the $1.5 to $2.499 million category (59, from 48 a year earlier) and just 4.35 percent – 48 vs. 46 a year earlier, at the $2.5 million or greater level. As of Sept. 30 this year, there were 107 homes for sale in San Francisco County priced greater than $1.5 million. The highest-priced home sold was $9.9 million, in San Francisco. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $96,571,000Units Sold: 27Highest Price: $9.9 millionPeriod 3Q 2005Total Sold: $64,503,500Units Sold: 18 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 59Listed Median: $1,799,000Units Sold: 51 Period 3Q 2005Listed: 48Listed Median: $1,895,000Units Sold: 64 Santa Cruz County Sales of high-end and luxury-class homes in Santa Cruz County during the third quarter we fairly steady compared with the same period a year earlier, as 20 homes sold between $1.5 and $2.499 million versus 19 a year earlier, and five homes sold for greater than $2.5 million in the quarter, compared with nine during the third quarter 2005. Regarding inventory and the seven counties monitored by Alain Pinel Realtors, Santa Cruz County experienced the greatest decline in inventory of homes for sale from $1.5 to $2.499 million, falling from 85 listed for sale at the end of the third quarter 2005 to 75 for the recently ended quarter – an 11.76 percent decline. At $2.5 million or greater, 50 homes were listed for sale at the end of the quarter, compared with 46 a year earlier, for a modest 8.7 percent increase. The highest-priced home sold was $3 million, in Santa Cruz. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $13,445,000 Units Sold: 5 Highest Price: $3 millionPeriod 3Q 2005Total Sold: $28,425,000 Units Sold: 9 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 75Listed Median: $1,899,000Units Sold: 20Period 3Q 2005Listed: 85Listed Median: $1,880,000Units Sold: 19 Monterey County The high-end and luxury property markets in Monterey County experienced the greatest drop in unit sales of the seven counties tracked by Alain Pinel Realtors, as 18 homes sold for $2.5 million or greater -- versus 33 in the period a year earlier, for a 45.45 percent decline. Meanwhile 43 homes sold from $1.5 to $2.499 million during the third quarter this year compared with 59 in the same quarter a year earlier, a 27.12 percent drop. Inventory increased at both price points, too. As of Sept. 30 this year, there were 194 homes for sale in the county priced above $2.5 million, compared with 156 homes available on the same date in 2005, a 24.36 percent increase. Inventory of homes offered from $1.5 to $2.499 million increased by 29.41 percent on a year-to-year basis, with 198 on the market in this range at the end of the third quarter this year versus 153 for sale at the end of the same quarter in 2005. The highest-priced home sold was $9.3 million, in Pebble Beach. DH&E base rate $2.5 million +Period 3Q 2006Total Sold: $70,769,650 Units Sold: 18Highest Price: $9.3 millionPeriod 3Q 2005Total Sold: $128,795,495Units Sold: 33 INVENTORY/Unit SalesDH&E base rate $1.5 million +Period 3Q 2006Listed: 198Listed Median: $1,895,000Units Sold: 43Period 3Q 2005Listed: 153Listed Median: $1,900,000Units Sold: 59 About Alain Pinel Realtors Alain Pinel Realtors is a founding member of Luxury Portfolio, an operating unit of The Leading Real Estate Companies of the World (formerly RELO). During 2005, Alain Pinel Realtors (APR) posted a record of $7.75 billion in total sales volume, compared with it previous record of $7.4 billion in 2004. Last year, APR represented home buyers and sellers in 6,788 total transaction sides. The average sale per transaction side for Alain Pinel sales professionals in 2005 was $1.14 million. APR has a joint venture partnership in the mortgage lending institution, Private Mortgage Advisors, which is an affiliate of Wells Fargo Bank, N.A. For a complete listing of Alain Pinel Realtors offices, services and agents, please visit our website at apr.com or call 408-741-1111.

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