A $10,000 jump in home prices last month could be the last glimmer of Silicon Valley's seller's market.

In what has been the nation's hottest market for years, most homes now sell at or below the asking price, inventories continue to soar and listings are languishing longer on the market.

The median sales price for closed transaction during March was $565,000, up from $555,000 in the previous month, and up from $524,000 a year ago, but those numbers reflect sales from a month or more ago.

Prices for initiated transactions still in escrow remains flat, according to the latest Santa Clara County Real Estate Market Update ".

"Although this is an increase from February at $555,000 it is still down from the record high of $577,500 in January," said the report's author, Richard Calhoun, broker owner of Creekside Realty in San Jose, CA.

"The median list price for transactions initiated remains basically unchanged at $549,000 during March for the third month in a row," he added.

What's more, only 41.3 percent of the homes sold in March sold for more than the asking price -- the lowest level since October, 2000 when 40.9 percent sold for more than asking. A year ago March, when the frantic market sizzled with multiple offers, a whopping 72.4 percent of Silicon Valley's homes sold for more than the asking price,

Also, in the past year, the telling Days of Inventory (DOI) has soared from 27.4 days to 123.5 days. DOI is a theoretical number indicating the number of days it would take to deplete the current inventory, at the current sales pace, if no new homes came on the market.

"Because inventory has continued to increase it appears more sellers want to sell than buyers want to buy. If this continues, prices will fall," Calhoun said.

Calhoun said Silicon Valley's once hot market has been cooling since November 2000 when the inventory count began to grow exponentially.

In November, the 961 listings represented 108.5 percent of the 886 listings in November 1999. On April 5, there were 3,424 homes for sale, a whopping 332 percent increase from the previous year.

"The inventory has not been this large since I started collecting the data in September 1998. MLS data indicates that current inventory levels are the highest they've been since 1995," said Calhoun.

The year 1995 marked the first strong recovery year and return to a seller's market after the 1989-1990 real estate market crash in California.

As the market begins to move in an opposite direction, expect April's number to begin to statistically document the decline in prices.

"I expect near term prices to be flat or down. After experiencing a 47 percent increase in prices in just two years, this is OK," Calhoun said.

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Published: April 13, 2001

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.