Home price sticker-shock suffering Silicon Valley home buyers may yet have a window of opportunity -- relatively speaking.

Instead of rising $30,000 to $40,000 a month, as they did last winter, Silicon Valley's housing prices are now rising at or below "only" $20,000 a month.

What a relief.

Median prices of single-family-homes in Silicon Valley had been rising steadily for most of a year prior to April, when a tumultuous stock market knocked some ill-prepared buyers from the market, inventories swelled and multiple offers tapered.

In April, median prices on sales under contract dropped less than $1,000 to $499,000 from $499,950 in March, but have since resumed their upward trek, according to the Santa Clara County Association of Realtors.

Toppling one record after another, median prices of single family homes in May were at $520,000, and then $539,979 in June, the latest record price, according to the association.

San Jose, CA-based Creekside Realty broker Richard Calhoun, an avid market watcher and number cruncher says the upward trend in prices is somewhat misleading.

More expensive areas in northern and western Silicon Valley's more affluent neighborhoods (Palo Alto, Saratoga, etc.) experienced price drops, while less expensive areas to the south (including San Jose) continued to experience price increases.

Calhoun who tracks median prices of closed sales said, by his count, the median price increased from $530,000 in May to $540,000 in June, but still remains below the record median price in his books of $560,000 set in April.

"However, this does not change my outlook. I still expect prices to decrease in the near term. I would expect homes to be about $525,000 for July and condos to be about $310,000," said Calhoun who also expects more of an equilibrium in price movements for all Silicon Valley areas.

"Combined with a general downward trend. I do not expect this trend to be significant. My target number remains about $515,000," for a price "bottom" this year he said.

Calhoun says inventories continue to weigh down the upward trend of prices. In recent weeks, single-family inventories rose above 2,000, and, at 50 days of inventory (DOI), the DOI is the highest its been since January 1999. Days of inventory is a theoretical number that indicates how many days it would take to deplete the current inventory at the present sales pace, provided no new homes came on the market.

"I would expect the inventory level to remain relatively unchanged for the next month and then expect a gradual decrease. This is assuming that the market follows its normal seasonal pattern, which is what I expect," Calhoun said.

So where's that window of opportunity?

If previous seasonal market fluctuations are any indication, buyers have until January 1, 2001 -- if not sooner -- before prices pick up steam again and head for new heights.

"The ideal window is maybe as early as August through October. Last year, there was a 5 percent increase in November, a first since 1984," said Calhoun.

For sellers who want to get the best offer, the window doesn't open again until next year, say March 15 to April 15, when prices typically reach the year's record high, said Calhoun.

"The real question remains, what will happen the first quarter of 2001? I don't think there is much doubt the prices will increase, but can the market sustain those increases after they occur?" he asked.

Published: July 14, 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.