The number of Silicon Valley home sales are down and inventories are rising -- conditions that can generate downward pressure on prices.

However, a wave of buyers chasing interest rates and willing to pay top dollar for homes are off setting conditions that could lower prices.

"A lot of people were out of market a few months ago. They wanted absolutely nothing to do with the market. Now they are seeing it as being a little friendlier. And those people are seeing interest rates rise and know they need to get serious about buying now," said Robert Aldana, a real estate agent with Intero Real Estate Services in Los Gatos.

After the median price for single-family detached homes in closed sales lost $27,000 in September, October's sales activity helped put back $8,000 as the median rose to $741,000, according to Creekside Realty owner/broker Richard Calhoun's Bay Area Real Estate Market Newsletter.

Last October, the median price was $636,000. The record median, $760,000, was originally set in June earlier this year, according to Calhoun's data, complied using Campbell, CA-based RE InfoLink's official multiple listing service statistics for the region.

More affordable condos did even better.

The median price of condos involved in closed sales in October regained the $15,000 lost in September. October's median condo price was $495,000 in October -- at the same level of August's median and $95,000 more than it was a year ago. Condos sold, on the average, for 101.3 percent of asking in October this year.

"If you look at the statistics over the past 20 years, this time of year you are going to find what is happening is absolutely normal. It's not a bad market. It's a normal market. What we have seen over the past five years has been an aberration," said Aldana.

Overall, sales for condos and single-family homes combined slipped from 1,947 in October 2004 to 1,704 in October 2005 as inventories swelled from 2,999 to 4,181 during the same period.

But as sales slipped and inventories rose, many buyers, sensing some bargaining room, moved faster. Condo home sales were brisk, occurring on average in 24 days in October, down from 28 days a year ago and 25 a month ago. The average days on the market for single-family detached homes in October 2005 was 34, equal to the number of days on the market in October 2004, but longer than September's average 29 days.

Attribute some of the brisk sales to mortgage rate chasing.

Freddie Mac's Primary Mortgage Market Survey revealed the 30-year fixed-rate mortgage averaged 6.31 percent for the week ending Nov. 3, up from the previous week's average of 6.15 percent. The 0.16 percent jump was the largest single-week increase in average interest rates during eight consecutive weeks of rates moving relentlessly higher.

Last year at this time, the 30-year mortgage's fixed-rate averaged 5.70 percent.

A sales slow down was also apparent for higher priced homes.

"The lower priced homes are still getting attention. The high priced homes (sales) are stalling," said Mary Pope-Handy, also with the Los Gatos Intero office.

For example, in the city of San Jose where the median price of single-family detached homes was $695,000 in October, homes sold, on average, in 33 days. In the city of Santa Clara, the October median was $700,000 and homes sold, on average, in 26 days.

"The low-price range, $630,000 to $650,000 or so is still doing really, really good," said Jim Myrick, president of the Santa Clara County Association of Realtors.

Myrick, also owner/broker of Realty World-Realty Solutions in San Jose, added, "We had a three week lull there, but last month saw the increase in prices as the lower-end homes remained a strong market."

In Los Gatos where the median price was $1.6 million, the average days on the market was 38. In Saratoga, where the median was $1.46 million, homes languished an average 84 days before selling.

Published: November 9, 2005

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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.