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| January 30, 2003 |
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If you bought a home in Silicon Valley a year ago, it likely has appreciated in value. If you bought a home two years ago it probably lost value. The latest median price of single family homes was $538,000 in December 2002, $499,000 in December 2001 and $540,000 in December 2000, according to data from RE InfoLink the Campbell, CA-based multiple listing service. The value of a low-priced home purchased when the technology sector began to dot bomb in March of 2000, is now worth about 19 percent more, but if you purchased a mid-priced home at the same time the value is up only 2.5 percent. If you were better off and purchased one of the most expensive homes, your home's value has probably shrunk by more than 25 percent. Home prices have risen in Silicon Valley for the past two months, and over the past year, but the next few months are likely to bring the largest year-to-year price plunge the Silicon Valley real estate market has ever seen -- as much as a $50,000 plunge. To say Silicon Valley is a volatile real estate market is an understatement and examining only month to month and year to year sales figures could mislead buyers and sellers into financial disaster. "The media keeps talking about year-over-year prices being up, but it's down 12.5% percent from two years ago. If people always assume the market is going up, but that's contrary to the long term how are you going to get people to really look at the market?" asked San Jose-based Creekside Realty's Richard Calhoun, a real estate broker, investor and market statistician known for his number crunching addiction. "Isn't the goal to try to tell people what the market is doing so they can make an informed decision?" said Calhoun who sifts through RE InfoLink's five-county database to inform his clients and provide date to the media. Calhoun says, lately, the media too often reports only a recent glimpse of the Silicon Valley market when the volatile region warrants a more detailed analysis. Right now, prices are showing month-to-month and year-to-year upward trends, but economic indictors tell another story. St. Louis, MO-base United Van Lines 26th annual migration survey revealed, of 43,694 California household good shipments last year, 22,744 or 52 percent were outbound and 20,950 or 48 percent were inbound. "Although the data is for the entire state, San Jose's unemployment rate makes it a good chance that a disproportionate amount of the net migration out is leaving from Santa Clara County," said Calhoun. Job losses in the Valley -- 127,000 from the first quarter of 2001 to the second quarter of 2002 -- equaled more than half the total job gain for the area during the 1998 to 2000 period according to Joint Venture Silicon Valley Incoming president of the Santa Clara County Association of Realtors, Mike Donohoe, who is alalso broker/owner of Silver Creek Financial in San Jose says Silicon Valley's housing market isn't loopy, it's not a bubble popping and it's pretty much finished correcting itself from the fast accelerating market of the dot com boom era. It's just that it's as uncertain as the economy. "It's not a correction so much as it is a function of the market's supply and demand. Projecting out to the end of the year, the volume will be the same or a little higher. I think it's going to be driven by (mortgage interest) rates that make it affordable for first-time home buyers and that will make the lower end strong, but because of price pressures on homes in the upper end, we will see the median price tend to dip down overall," Donohoe said. However, Calhoun says, because of the media's reporting that "dip" is going to feel like a dunk. "If we are sitting around $538,000 now and last May was $578,000 and the economy is fairly flat and prices aren't going to go up or down in any direction to any great extent, you could be having a $50,000 year-over-year drop. But that really isn't shocking because the writing is on the wall, but the media hasn't been reporting what the numbers are really saying," Calhoun said. |
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