Newport Beach Home Price Index

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The Newport Beach Home Price Index (NBHPI) is a compilation by The Girling Team of 25 Newport Beach neighborhoods, and it tracks sales prices of single-family, detached residential homes since 2000.

The Q3 results for the NBHPI show that home values rose 3.39 percent from the previous quarter and 5.35 percent year-over-year. The Q3 NBHPI weighted average price for a home in Newport Beach was $2,255,919 for Q3, up from $2,182,015 in Q2 and up from $2,141,402 a year ago.

Starting in 2000, values rose 170 percent until they peaked in 2007, and despite the general declines, prices are still up 100 percent, 2000 to date. The NBHPI also shows that prices are down 25.7 percent since the peak in Q3 2007.

With regard to the number of homes that have sold recently, 184 properties sold in Q3 2012, the most in any quarter since 189 sold in Q3 2003.  The 184 sales compares to 148 in Q2 and 116 a year ago.

The chart shows that prices are approaching levels that would have resulted if prices had appreciated at a constant rate of 4 percent (see red line).  The NBHPI illustrates that the luxury market has been somewhat resilient when compared to other real estate markets, not declining as much and even showing some price appreciation, especially over the past 24 months.

Comparatively, the California median price (see chart) paid for a home in August was $343,820, up 2.98 percent from $333,860 in July, and up 15.7 percent from $297,060 year-over-year. The August median price was the highest for any month since August 2008, when it was $352,730. The state median home prices have been tracking (within a range of +/- 10 percent) along a constant appreciation rate of 2.5 percent (red line) since early 2009.

In general, the local real estate market has been buoyed by low inventory levels, investor demand and historically low interest rates.  In fact, the FNMA, 60-day historical yield on Oct. 1 was an unbelievable 2.75 percent, although many borrowers are still finding it challenging to get a loan without stellar credit.

Investors who have cash want to put it to work and are buying investment properties.  And, the estate and gift tax exemption for amounts up to $5 million will expire at the end of 2012, which has provided additional support
to the real estate markets with some investors setting up vehicles that enable them to gift real estate.