SILICON VALLEY -- There's a wistful look in her eyes and an almost dream-like tone to Nakisa Badiri's voice when she talks about buying a home.

"The only people who can live here are bringing in 100,000 grand a year. My boyfriend is a blue collar worker and I'm an administrative contract worker. Together making $60,000 that's just not conducive to buying something in The Valley," says Badiri, almost 40.

"The Valley" is Silicon Valley, home of the nation's computer and information technology industries.

It's also home of some of the nation's most expensive residential real estate.

Fifty miles south of San Francisco, geographically comprised primarily of Santa Clara County, Silicon Valley is a metropolis of some 1.6 million residents who live in an area that cups the southern end of the San Francisco Bay.

In February, fueled by an unstoppable technology-driven, job-churning economy, the region spawned a record average half million-dollar price tag for single-family detached homes.

"If I can't get a place here. I'll just have to move out of The Valley. I don't know where," says a Badiri, a San Francisco native, who now lives in Sunnyvale, a central Silicon Valley city where the median price of all homes was $362,450 in March.

The countywide record average dropped back to $497,000 in March, according to the San Jose-based Santa Clara County Association of REALTORS®, which is quick to point out the median price is a more accurate indicator of prices overall.

The single-family median price in the county was only $398,000 in March, according to the association.

Only.

Condo prices, at a median of only $228,888, are selling today for what single-family homes sold for in the area 10 years ago.

Only about one in three county residents can afford the median priced home, according to the California Association of REALTORS®. Most of them work for employers who compensate them with stock options along with wages. Other buyers are smart enough to otherwise own a piece of Wall Street.

Still other buyers put things into perspective.

"The Association of Bay Area Governments projects more job growth and a labor shortfall so we continue to import labor from outside the country where this doesn't look so bad. They come from nation's with low wages, no infrastructure, political and economic instability. They say so what if they have to pay a little bit more money for the American Dream?" says San Jose broker John Pinto, who's worked through several boom and bust cycles in The Valley.

Pinto divides the market's home buyers into two categories, the hopeful and the realists. One often becomes the other.

"There are two kinds of buyers. Those who've been getting slapped around for months and are tired of it and the ones just getting started who aren't so skeptical. You can tell which is which based on their aggressiveness," Pinto said.

In one instance, a buyer bid $1 million more than the $2.1 asking price for a Palo Alto home. Palo Alto, home of Stanford University, yielded a $585,000 median price for all homes in March when homes sold in an average 21 days.

Multiple offers in double digits, homes selling without inspection, loan and other contingencies and homes selling in hours are commonplace.

Working thirtysomething stiffs, Julie Chancerelle, events and public relations manager at the Santa Clara County Real Estate Board and her fiance, Eric Ziemelis, designer and co-owner of B/Z Studios and Design in Mountain View, a northern Silicon Valley city, were "slapped around" from October 1998 until just recently.

They decided to become landlords so they could afford a Silicon Valley home. "We had $100,000 down and qualified for a $350,000 loan. The houses we looked at in that price range were the pits in the worst part of town with views of train tracks and sound walls and with back yards next to the Seven-11," Chancerelle said.

Next they considered buying a duplex. They'd live in one half and rent out the other half so they could afford to buy into a better neighborhood.

"We found ourselves in gang territory," Chancerelle said. Six months after they first started looking, the couple is scheduled to finally move today (April 30) into a $537,000 Sunnyvale triplex on a quarter acre. The three 1,200 square foot units are a few blocks from the noisy commuter train station, a few doors from an expressway on ramp, near a fire station and in the flight path of military transport planes, but that's the best they could do.

"I ended up looking at 75 homes before we found this one. It's the lesser of all evils," Ziemelis said.

Other buyers shouldn't expect to fare much better. Historically low interest rates, demand and an inventory of only a few thousand homes for sale are combining to continue a boom that's pushed up prices since 1994.

"Everyone knows the market has been hot in Santa Clara County, said SCCAR president Doug Tobin, "but the March numbers are really catching us all by surprise."

Over the past six months, 10,328 homes have sold in the county, while the median price for housing has risen 12 percent during the same period.

"The current trends look strong through 1999 and well into next year,'' said Tobin a Century-21 agent.

Countywide, existing residential homes sales in March climbed to 2,033, a 20 percent increase over sales in February and a 25 percent increase over sales a year ago. Homes averaged 31 days on the market compared to 54 days in February.

The Silicon Valley trend is similar to those in other California Metropolitan areas and it's a trend that's spilling over big-city borders, as buyers take on longer and longer commutes to afford a home.

"Sales activity is shifting to the inland regions of the state, as affordability issues appear to be driving buyers into the Central Valley, High Desert, and Inland Empire regions," said Leslie Appleton-Young, the state association's vice president and chief economist.

The association, in conjunction with Transamerica Intellitech's MetroScan software and information product, reported more than three-quarters of California cities and communities showed an increase in their respective median home prices from a year ago.

"Yeah, a beautiful house for a little bit of money in the middle of nowhere. I just don't see having a house that looks like everyone else's and you are so far out the only thing you can do is rent videos," said Badiri.

Published: April 30, 1999

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