Low mortgage rates, a short supply and over-bidding buyers kept the pressure on Silicon Valley's housing market in June, pushing the median single-family detached home price tag up another $11,000 to a record $760,000.

That more than offset the $1,000 drop to the $749,000 median in May -- slippage considered evidence that prices are flattening rather than falling.

"This is really only a $10,000 jump and, while you can't ignore a 1.5 percent increase, it's not a lot. I expect July numbers to be back down. Prices are basically being maintained," said Richard Calhoun, broker/owner of Creekside Realty in San Jose.

Indeed, the $11,000 jump is far off one $28,000 month-to-month price increase and another $41,000 month-to-month jump earlier this year.

Silicon Valley's stalwart housing market is not only good news for sellers, but public schools as well. Higher home prices mean higher property taxes -- 61 percent of local property taxes go to the state to fund public education.

All real estate property -- commercial and residential -- in the Santa Clara County rose in value 8 percent in the past year, four times that of last year's rate and the fastest spurt since 2001, largely due to the residential sector, according to Santa Clara County Assessor Larry Stone.

Single-family detached home prices, based on closed sales, are up $118,000 since last year, a whopping 18.3 percent jump from $642,000 in June of 2004, according to Calhoun's Bay Area Real Estate Market Newsletter, an analysis of statistics from the area's multiple listing service, R.E. InfoLink in Campbell.

During the same period, the county's condo prices rose faster by $96,000, a 24.4 percent increase from $393,000 a year ago to $489,000 in June this year. Further indication of flattening prices, however, condo prices slipped $1,000 from a record $490,000 in May to $489,000 in June this year.

The median condo price is likely to surpass the half-million dollar mark soon because the housing is virtually the only market rate "affordable" housing available -- short of manufactured homes.

While sellers and schools were cashing in on the windfall, buyers scrambling to become home owners were getting updated market conditions advisories as part of the disclosure package in their sales contracts.

The California Association of Realtors updated its "Market Conditions Advisory" form in October last year to disclose to buyers "the potential risks inherent in changing market conditions."

Agents in Santa Clara County and others use the form to disclose pointedly to buyers, "In the light of the real estate market's cyclical nature, it is important that buyers understand the potential for little or no appreciation in value, or the actual loss in value, of the property they purchase."

Greg Haas, broker/owner of the Real Estate Investment Counsel in Milpitas said buyers often jostle for position in today's low inventory-high demand market by offering more than the seller is asking, often much more to come in ahead of multiple offers.

The practice gambles that prices will soon appreciate enough to offset paying more than the list price.

"People who purchased a few months ago have been bailed out by appreciation, but if you are the last one in, well, that's what the disclosure is for," said Haas, past president of the Santa Clara County Association of Realtors.

However, even if prices decline, says Haas, homes retain value, not only as an investment, but as a tangible possession.

"The market lets a little air out once in a while, but it's not like worthless stock," he added.

What's more, if history repeats, any market decline won't be as deep as the last market boom was wide and buyers will need only to hold their place until the next rally.

"I'm selling homes for elderly couples in Santa Clara who purchased homes on the G.I. Bill in 1950, literally for $15,000 to $20,000 and now they are selling them for $700,000. People have to live somewhere," said Kevin E. Garvey, a Realty World broker in Santa Clara.

But running in place could get tough for today's equity-poor buyers who purchase with no-money down and finance the buy with adjustable, interest-only loans and other easy-money mortgages that force home owners to rely only upon market-based appreciation to gain equity. Most mortgages today come with little incentive to actually pay down the loan balance to obtain equity.

If rates rise and monthly payments adjust up too high, those who perhaps could barely afford to buy a home -- the last ones in the market buying the most expensive homes -- will be hit hardest.

While there is a potential for many of those home owners to default or sell-off, flooding the market with homes in volumes that force down prices, the potential is small, most experts believe.

For at least the remainder of the year, the shortage of homes and the ever-present demand keeps the potential for a bust limited.

"San Jose does a wonderful job, a great job in adding multi-unit housing, the housing of the future, and that's encouraging, but California is still more than 40,000 units short of its population growth. In our area, it's a pain to build a house," said Jim Myrick, president of the Santa Clara County Association of Realtors and broker owner of Realty World-Realty Solutions in San Jose.

Published: July 8, 2005

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.