No segment of the U.S. housing market is safe from the price corrections and declines currently taking place throughout the country. The luxury housing market is no exception, with banks pulling back lending to even high net-worth households. Luxury home prices in three major California cities, Los Angeles, San Diego, and San Francisco, all posted modest declines in the first quarter of 2008.

In a survey released Monday, First Republic Bank provided price estimates that revealed the average luxury home in Los Angles was at $2.35 million at the end of the first quarter, down 2.2% from the fourth quarter average.

In San Diego, luxury homes here also experienced a 2.2% decline, dropping to an average of $2.06 million. San Francisco's luxury housing market fared a bit better, experiencing just a 0.8% slide.

Katherine August-deWilde, President and COO at First Republic Bank, said that after many years of strong appreciation, "values of luxury homes in California have declined slightly in price."

Within the luxury housing market, there are different trends being observed. The market is most stagnant and is the weakest at the lower end. This is because "move-up buyers" are staying put.

However, once you cross the $4 million threshold, "there is consistent, pent-up demand", said Barry Sloane of Sotheby's International Realty in Beverly Hills. "The higher the price, the greater the demand, and the more sales there are. It's extraordinary," he said.

In Orange County, CA, homes in beach communities have retained value, while inland properties have fallen in price. Within the region, real estate agents and real estate virtual assistants indicate that buyers are most focused on getting a deal. Bargains are what buyers are on the lookout for.