Area Luxury Home Values Rise to $2.01 Million

The average price of a luxury home in Los Angeles rose to $2.01 million last quarter, according to an index released Monday by First Republic Bank.

Overall, values notched modest gains in Los Angeles, San Diego and San Francisco in the third quarter ended Sept. 30 compared to the second quarter.

Los Angeles area values, including those in West Hollywood, rose 0.7 percent from the second quarter of 2011 and increased 2.5 percent from the third quarter a year ago. The average luxury home in Los Angeles is now $2.01 million, according to the First Republic Prestige Home Index.

In the Los Angeles area, values have increased in three of the past four quarters. The highest end of the luxury market appeared to be the most robust, according to agents.

"For homes priced at $5 million and up, the market remains active," said Jane Brill Graven of Coldwell Banker Beverly Hills East. "There are well-qualified buyers who are looking for properties at the very top end, and they have the upper hand. Owners are having to reduce prices to where the market is."

Luxury home prices in many California communities increased due to low inventories, low interest rates and home prices that have declined over the past few years, said Katherine August-deWilde, president and chief operating officer of First Republic Bank.

"All three major metropolitan areas in California experienced gains in home prices in the third quarter, which is the first time that has occurred since the fourth quarter of 2010," said August-deWilde.

The First Republic Prestige Home Index measures changes in homes valued at more than $1 million in key California urban markets. Common features of luxury homes in the index include 3,000 to 6,000 square feet and three to six bedrooms and bathrooms.