The 'buy now' refrain is perhaps never more meaningful in Silicon Valley than it is at this time of year.

And that could be true for the rest of the nation, with slightly different timing based on regional conditions.

The Silicon Valley housing market is taking a seasonal breather from quickly escalating prices, but less cooperative mortgage interest rates could cut into some of those savings.

"It's time for buyers to get out there. We are seeing some price reductions and that's a normal seasonal trend," says Janet Houde, president of the Santa Clara County Association of Realtors in San Jose, CA.

"Most homes get sold between February and May every year and in June you start to see some backing off and by July it is really apparent," said Houde, an independent real estate broker in San Jose.

After relentless increases as high as $58,800 in one Spring month this year, the median price of single-family homes set a new record at $642,000 in June, but July's median is expected to begin to reflect the traditional seasonal price-stabilizing trend with the median moving down 1.5 percent to about $630,000, according to an estimated projection from Richard Calhoun, broker owner of San Jose-based Creekside Realty and author of the Bay Area Real Estate Market Newsletter, a compilation of area real estate statistics.

In colder climes with longer winters, the full-fledged buying season may not get underway until later in the year, say after the snow melt of the spring thaw.

Seasonal slow downs with the potential for prices to temporarily flatten or roll back a bit gives buyers some breathing room and more time to negotiate and scrutinize home buys. When the buying season resumes, however, expect more of the same price volatility just about everywhere. Except for a few local markets, the current seasonal slow down isn't an indication that bubbles are about to pop.

The national median existing-home price was $191,800 in June, up 9.6 percent from June 2003 when the median was $175,000, according to the National Association of Realtors.

The Office of Federal Housing Enterprise Oversight's (OFHEO) Home Price Index reported a 7.71 percent annual rate of appreciation based on first quarter home sales this year. Home prices nationwide have soared more that 40 percent in the last five years. During the first quarter this year only 39 of 220 metro areas nationwide showed negative quarterly price growth, OFHEO reported.

"If you are knowledgeable, now is the time to buy, but sellers aren't knowledgeable. If you try to tell sellers the market is going down they look at you kind of funny," said Calhoun.

Meanwhile, putting back some of what the seasonal slow down may take away, mortgage interest rates rose for the first time in five weeks breaking the six percent barrier for the second time this year.

Fixed interest rates had been falling from 6.32 percent on June 16 to 5.98 percent July 22, before turning up July 29 to 6.08 percent on 30-year conforming loans, according to Freddie Mac's Primary Mortgage Market Survey.

The rise could be in anticipation of the next Federal Reserve rate hike on benchmark rates to keep pace with the growing economy, said Frank Nothaft, Freddie Mac's chief economist.

But don't bank on interest rates to take many buyers out of the market and reduce your competition. Any reduced pressure right now will come largely from the seasonal slow down.

"I came here in 1980. The interest rate was 16 percent. My first sale was with an 18 percent loan for a home worth $92,000. Now it's worth $700,000. Should they have not bought the home because the interest rate was too high?" asked Joe Brown, a Coldwell Banker managing broker in San Jose.

Barring a major quake or other widespread catastrophe, both interest rates and the next buying season will combine to continue to make home prices less and less affordable for those who don't manage to buy sooner rather than later.

"Typically sales are down in the month of July and August and pick up again after Labor Day. Through Thanksgiving they slow down again and after Superbowl weekend, they pick up again," said Brown.

To cash in on your housing market's seasonal lull this year, the experts say buyers should now be sitting down with mortgage lenders or brokers, checking their credit reports and getting approved for a mortgage.

With so many buyers, sellers are more apt to accept bids from those with real money who are ready to buy.

"Make an offer without a preapproval and you'll get thrown out. Study the neighborhood you think you'll like. Start learning more about real estate. If you are a first-time home buyer, learn about buyer programs," said Houde.

Brown says, despite talks about a housing market bubble, higher prices in Silicon Valley and much of California and other regions remain inevitable because of a host of regional market conditions. In Silicon Valley it's low inventories, limited land for new building, regional economic potential, population growth, diversity in both demographics and geography, as well as a desirable climate.

"I'm sitting in the Safeway parking lot and it's 82 degrees and in the state of Texas the baseball game is delayed because of a summer storm. This is what drives this market. People want to live here," in Silicon Valley said Brown.

Published: August 3, 2004

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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.