California Luxury Home Values See Largest Gains of the Year; Third Quarter Strong for SF Bay Area, Los Angeles and San Diego.

Business Editors/Real Estate Writers

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 16, 2000

Luxury home values throughout California experienced their largest quarterly increase of the year during the third quarter of 2000, according to the First Republic Prestige Home Index(TM) (NYSE:FRC). San Francisco Bay Area values jumped the most to yet another record high, while values in Los Angeles and San Diego rose to their highest levels since the third quarter of 1993.

SF Bay Area Average Luxury Home Value Surpasses $2 Million

According to the Index, the average value of a Bay Area luxury home during the third quarter of 2000 jumped 14.5% over the previous quarter and passed the $2 million mark for the first time in the history of the Index. The average value in the third quarter was $2,225,161.

"Third quarter Index figures also reflect a 33.3% increase since the beginning of the year and a 39.1 % increase over a year ago for Bay Area luxury home values," remarks Katherine August-deWilde, chief operating officer of First Republic Bank. "Over the last two years, Bay Area luxury home values have risen 53.5%."

Stock market fluctuations did not appear to affect the luxury home market during the third quarter, and Bay Area real estate brokers expect the market to remain strong through the end of the year.

"We're seeing more eight-digit sales now than ever before," observes Betty Brachman of Pacific Union in San Francisco. "Though more sellers lately seem to be taking advantage of the appreciation of their properties, there are still more buyers than sellers and buyers will be looking for homes during the holidays."

In Oakland, the luxury home market this year has been "remarkable," according to D. J. Grubb of The Grubb Co. in Oakland. "Sales prices in the Oakland neighborhoods of Crocker Highlands, Montclair and Rockridge are up 35% over last year. For the rest of the year, the largest marketplace factor will be buyer confidence, which will parallel the fortune of the local technology industry."

On the Peninsula, luxury home values are breaking records set last year. "In 1999 we saw some of the highest increases in average sales prices in more than 20 years," recounts Peggy LeDoux of Cashin Company in Burlingame. "Few people thought we'd witness those kind of increases again, but this year we've seen even higher increases. In Hillsborough, for example, there are 23 homes on the market now, but only one is listed under $2 million."

In Marin County, "the first nine months of this year were considerably stronger than the first nine months of 1999 for luxury home sales," reports Marie Whitermore of Frank Howard Allen in Tiburon. "The market has cooled somewhat since early in the year, yet a $6 million property sold within one day. The next few might be a little slow, only because even well-to-do buyers might want to travel and otherwise enjoy the upcoming holidays."

Los Angeles Luxury Home Values Highest Since 1993

The value of a luxury home in Los Angeles increased during the third quarter of 2000 to an average of $1,184,164 -- 4.7% ahead of the previous quarter. Values are up 8.7% over the past year.

"In addition to having the largest quarterly gain in the last two years, Los Angeles luxury home values have risen to their highest level since the third quarter of 1993," states First Republic's August-deWilde. Los Angeles area real estate brokers expect the same level of market activity to continue through the holidays.

"This is the best year we've ever had in terms of both units sold and dollar volume," comments Joyce Flaherty of Coldwell Banker in Beverly Hills. "Through mid-November, we have sold 303 properties valued at $2.5 million or more and 76 valued at $5 million or more, compared to 224 and 47 respectively last year."

"We've seen record prices this year in Beverly Hills, Brentwood, Pacific Palisades and Santa Monica," says Jody Fine of Fred Sands Estates in Pacific Palisades. "We expect the market to be active until the end of the year as buyers still want homes and will be actively looking throughout the holidays."

San Diego Luxury Home Values Also Rise to Highest Level Since 1993

In San Diego during the third quarter of 2000, the average value of a luxury home reached $1,147,112 - a 4.3% increase over the previous quarter. Values are up 9.3% since the start of the year and 5.1% over a year ago.

"Parallel to Los Angeles, San Diego luxury home values also had their largest quarterly gain in over two years and have risen to their highest level since the third quarter of 1993," notes First Republic's August-deWilde.

San Diego real estate brokers anticipate a steady but not a sharply rising market for the remainder of the year.

"We've already surpassed our 1999 dollar volume," reports Laura Barry of Barry & Brown Elite Properties in Rancho Santa Fe. "The last quarter will not be as vibrant as the first part of the year, but the market will remain active through the end of the year."

Katie Holcombe of Dyson & Dyson in Rancho Santa Fe agrees. "It has been an incredible market for the first nine months. Though we do not anticipate the torrid atmosphere we had at the start of the year, we anticipate activity to be brisk between now and the end of the year and expect to go into 2001 on solid footing. Qualified buyers are not affected that much by stock market or interest rate gyrations."

The First Republic Prestige Home Index(TM) tracks the value of homes worth $1 million+ in San Francisco and Los Angeles and $750,000+ in San Diego. The Index is the combined product of First Republic Bank, the leader in luxury home financing in California, and Case Shiller Weiss, Inc. of Cambridge, Mass., a pioneer of the repeat sales index and a recognized leader in tracking historical price trends of single-family homes.

The First Republic Prestige Home Index(TM) in each market is based on a portfolio of individually selected, single-family homes that have had their value traced back to 1985 using regression analysis. For each home in the portfolio, a market valuation was performed for each year taking into account repeat sales, comparable sales, and characteristics such as house size. The process is similar to one real estate appraisers use; however, the Index formula has a substantially larger database of more homes over a longer period of time.

Portfolios contain the same homes in each time period. Each portfolio is carefully weighted and balanced for proportionate representation of all appropriate neighborhoods and home values and represents a statistically significant sample of prestige homes in each market. First Republic's indexes are updated quarterly.

San Francisco Bay Area portfolio properties include a cross-section of homes valued at $1 million or more located in the following communities: 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 the Los Angeles portfolio represent a cross-section of homes valued at $1 million plus in the greater Los Angeles metropolitan area. Communities included in this portfolio are 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.

The San Diego Index portfolio represents a cross-section of homes valued at $750,000 plus in the following communities: Carlsbad, Coronado, Del Mar, Encinitas, La Jolla, La Mesa, Poway, Rancho Santa Fe, San Diego and Solana Beach.

The First Republic Prestige Home Index(TM) is the first statistical model of its kind customized to measure changes in high-end home values in key California urban markets. In producing the Index, Case Shiller Weiss 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.

First Republic Bank is a publicly-traded (NYSE:FRC) commercial bank with total assets of $3.6 billion. The Bank specializes in providing outstanding relationship-based service in private banking, investment management, trust and brokerage services, and real estate lending. Its investment advisory subsidiary, Trainer Wortham & Company, founded in 1924, manages over $4.2 billion in assets. First Republic provides its services in five major metropolitan areas: San Francisco and Silicon Valley; Los Angeles, Beverly Hills and Newport Beach; San Diego; Las Vegas; and New York City. More information is available on the Bank's Web site at www.firstrepublic.com.