Silicon Valley high-tech worker Terry Barton who, along with his wife, owns a $700,000 Mountain View, CA home with little room to expand, would like to move his family up to a larger home.

In Los Altos, the bordering city to the north, a desirable 40-year-old home recently came on the market listed at $1.2 million. After five days and 10 offers, the winning bid was $2.2 million -- cash. Escrow closed in 10 days.

"Eighteen months ago, houses on that street were going for $800,000 and $900,000. I am on the sidelines," said Barton.

If you've been waiting to buy a home in Silicon Valley and gambling home prices will flatten or drop, you've been losing tens of thousands of dollars a month.

In a region plagued by too few sellers and too many buyers, the lost bet has cost wait-and-see buyers more than $30,000 a month in recent months.

The median price of single-family, detached homes bolted closer to the half million dollar mark when it hit $489,000 in February, up $69,050 from December, according to official numbers from the San Jose-based Santa Clara County Association of Realtors. The association, through its multiple listing service provider, R.E. InfoLink, tracks prices of sales still under contract.

That's a whopping $100,000 or 25.7 percent more than single-family housing cost in February 1999.

The median price is the point where an equal number of homes sold cost more and an equal number cost less.

Silicon Valley's too-hot-to-touch housing market is fueled by an influx of workers seeking jobs from a technology-driven economy. Employers sweeten hiring deals with stock options, signing bonuses and other financial perks that pump up wages.

Statewide, with too many jobs and too few homes, California's housing shortfall is in the hundreds of thousands.

The unequal supply-demand equation is playing havoc with prices.

"One successful transaction involved an offer basically at asking price, however the buyer included a home at Lake Tahoe as a 'kicker'," said Penny Pompei, executive vice president of the Silicon Valley Association of Realtors in Los Altos, CA.

Half million dollar milestone

Actual selling prices -- based on closed sales -- are likely higher than the Santa Clara County Association of Realtors' sales-under-contract figure, which is based on asking prices.

A tally of February's sales closed thus far in Silicon Valley reveal the region has already surpassed the $500,000 milestone by about $30,000, according to Richard Calhoun, broker owner of Creekside Realty in San Jose.

His unofficial count puts the median closed sales price at $530,000, up more than $100,000 just since December, 1999, when the median on closed sales was $420,000.

Calhoun's current median closed sale price for single-family homes is also up a staggering $145,000 since February 1999.

Because all February's sales have not closed, the median price could change either way, but not by much.

"These numbers are relatively accurate projections with just over 50 percent of the properties reported as closed and disclosing the sales price," said Calhoun.

Only 721 single-family homes were available for sale in early March, they sold for an average 108 percent of the asking price in an average 23 days. Theoretically, if no new homes came on the market, the current inventory would be depleted in about three weeks.

"Currently, the market could use more sellers. This will happen as prices increase and people decide to leave Silicon Valley. Remember, increased prices don't help you if you are going to stay locally because the replacement home is getting more expensive also," Calhoun said.

Buyers' blunders

Some move-up buyers, as well as cash-rich, first-time buyers are breaking under the strain of the competition and buying homes virtually "site unseen".

"They go out and view the property, but have no inspection and they buy without contingencies. Almost buying site unseen is dangerous for the buyer and the seller is taking a big risk," said Carl San Miguel, president of the Santa Clara County Association of Realtors.

"The buyer doesn't know what he's getting and the seller has ramifications for non-disclosure. If there's too much pressure for the buyer to buy 'as-is,' that could come back and haunt the seller," said San Miguel, also broker/owner of Highland Properties in Campbell, CA.

Rare 'affordable' housing

More affordable condos and townhomes were unfortunately tougher to come by last month.

With a February closed sale median price of $300,000 (up from $230,000 a year ago), condos sell in an average 16 days, according to Calhoun. He says only 172 units were available for sale in early March. At the current sales pace, if no new condos came on the market, the current supply would vanish in about two weeks, based on Calhoun's theoretical "days-of-inventory" analysis.

Condos' closed sale price has risen $70,000 since February 1999 and only -- relatively speaking -- $29,000 since December.

How long will the market sizzle?

"We live in a land of entrepreneurs. As long as these out-of-the-box-thinkers are involved in solving the problem of buying a home, we will continue to have very creative solutions," said Pompei.

Perhaps, but the high cost of housing is beginning to take its toll on the region's social fabric. Ubiquitous help-wanted signs in the windows of restaurants, retail shops and other lower-paying, service-oriented, non-tech establishments are giving new meaning to the phrase "good help is hard to find."

A growing number of workers are abandoning low-paying jobs for more lucrative technology careers or they are moving away from Silicon Valley to areas with more affordable housing.

"I went to a pancake restaurant in Sacramento (180 miles north of Silicon Valley) over the weekend. It was so different to have an intelligent and enthusiastic waitress. It's hard for employers to keep people with the interest and ability to do the work. You forget the effects on the little things," said Barton.

Published: March 23, 2000

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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.