SAN JOSE, CA -- Santa Clara County, CA recorded the smallest number of closed single-family home sales in recorded history in January and initiated single-family home sales for the month dropped to a six-year low.

Silicon Valley continues to suffer a housing crisis of too many buyers who can't find enough homes close enough to their high-paying jobs, but high-end homes -- those for $1 million or more -- get the blame for cooling things off.

Single-family homes priced at $1 million or more was the market's weakest sector in January and it may be in for an about face, while less expensive home sales remain relatively stronger, according to the January 2001 Santa Clara County Real Estate Market Update released this week.

Statistician Richard Calhoun, who authors the monthly report, says buyers can look for high-end bargains, but warned sellers in that sector to list their homes at prices that reflect a changing market that's unable to yield the skyrocketing price gains enjoyed in 1999 and 2000.

"I think the properties over $1 million will see little to no gain. Prices may have actually already peaked and started to retreat. Sellers in this category need to me more realistic in pricing of their property as there are lots of high-end properties available," said Calhoun, also broker-owner of Creekside Realty.

Silicon Valley's lagging high-end sales pulled overall single-family home sales down to only 599 in January in Silicon Valley, the lowest level since 1984 when records were first kept. The previous record was in January 1995 when 611 single-family home sales closed. The number of initiated single-family home sales, 761, was the lowest level since January 1995 when there were 577 sales initiated.

"I suspect the poor performance of the stock market has had a more significant impact on the high end properties," said Calhoun.

While high-end home sales deflated overall sales figures, less expensive homes buoyed overall prices in the spotty market, Calhoun said.

The median price of closed sales for all Silicon Valley's single-family homes rose to a staggering $577,500 in January, up from $540,000 in December, 2000 and up from $429,000 a year ago.

"The Santa Clara County real estate market continues to experience a split market based on price. For homes less than $500,000 the days-of-inventory (DOI) is 30.1 For homes between $500,000 and $1 million the DOI is 70.2. For homes over $1 million the DOI is 130.5," said Calhoun.

Days of inventory is a theoretical number indicating how many days the current inventory would last at the current sales pace if no new listings became available.

"During 1999 and 2000, the DOI was basically the same, regardless of price. The entire market seems to be slowing with the high-end leading the slowing trend," Calhoun said.

DOIs are even higher in nearby counties. Santa Cruz County yielded a 79.2 DOI in January, Monterey County's was 76.3 and San Benito, 63.8 compared to Santa Clara County's overall 59 DOI.

That's some good news for sticker-shock beleaguered buyers. In December, less than two in 10, 18 percent, could afford the median priced home in Santa Clara County, up a notch from 17 percent in November, according to the California Association of Realtors.

Helping to hold off runaway price increases was a bulging inventory on February 5 of 1,505, up 232 percent from 649 a year ago, Calhoun reported.

"Although very significant on a percentage change, when you look at how low inventory is, does it really matter? Two years ago, there were approximately 1650 homes on the market and 1999 was still a great year," Calhoun said.

California continues to suffer a housing crisis with too few homes and too many buyers who still find it relatively easy to find high-paying jobs.

The state's home builders constructed 147,586 new housing units in 2000, only 59 percent of the amount needed, according to the California Building Industry Association.

"For more than a decade, we have been allowed to build only about half of the number of new homes needed to keep up with economic growth and the increasing California population," said Robert Rivinius, the association's chief executive officer.

From 1999 to 2000 single-family home construction in job-rich Santa Clara County fell by 15 percent, by 12 percent in Orange County, by 10 percent in San Francisco, San Mateo, and Marin counties, by 8 percent in San Diego County, and by 1 percent in the East Bay. It rose by 6 percent in Los Angeles County, according to the building association.

"That growing shortage of housing has been the major factor in the escalation of housing prices and is the reason that California is now home to nine of the 10 least affordable housing markets in the entire nation," Rivinius said.

Though somewhat cooler, Silicon Valley's housing market should retain its general seasonal upward trend in prices beginning right about now.

Calhoun says move-up buyers can cash in on the trend by buying a home now and selling their existing home in the spring, by March. 15.

"This will allow the seller to experience most of 2001's appreciation. Get your home ready for market and wait. If inventory grows or the number of sales per day remains low, then place the home on the market as quickly as possible. Santa Clara County may be at the peak already," said Calhoun.

For more articles by Broderick Perkins, please press here.

Published: February 9, 2001

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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.