The growing supply of unsold homes and lackluster demand from buyers has put more of Silicon Valley's housing market firmly in buyers' corner.

And savvy buyers may be hopping up on the fence, holding out for better days and better deals.

The latest report on one of the nation's most expensive housing markets, a market among the last in California and the nation to really feel the pinch, comes with a forecast for more home price declines in the near future.

Things could get nasty.

In Silicon Valley, the median price of single-family homes in closed sales fell 10 percent in May -- compared to last year. The May median price of $773,000 is down from the peak price of $858,000 set in April 2007, according to Richard Calhoun's Bay Area Market Newsletter.

The median condo price was down almost 6.5 percent to $502,500, compared to $537,000 a year ago.

A market icon for his housing market number crunching acumen, Calhoun, broker of Creekside Realty in San Jose, reported buyers were paying only about 98 percent of the sellers' asking price, on average, in May. That's down from more than 100 percent a year ago.

Calhoun says not since the year 2001 have home sales moved as slowly as they are moving now in the 15-city region of Santa Clara County, California, commonly known as Silicon Valley.

Much of the more affluent Northwest Silicon Valley region, thanks to a strong tech-based economy, remained a seller's market where some home price records continue to fall. But even within that area, smaller pockets revealed home price declines in May.

In the general market area, some prices have fallen by as much as 30 percent since the peak, says Calhoun. Other feet-on-the-ground real estate agents say some individual home prices have crashed even more.

Yet, even after price declines, many homes in Silicon valley remain unaffordable, especially in the current tight credit market.

The high cost of housing in Silicon Valley often means more expensive jumbo mortgage financing -- even after 20 percent down.

Along with tight and more costly credit and affordability issues, Calhoun cited other negative market factors including: homes in poor condition selling slower than the average sales pace and homes far from job centers likewise selling slower. The cost of gasoline is more than $4.50 per gallon at some Silicon Valley gas stations.

Together, local market conditions and economic issues impacting the nation point to further home price declines in the coming months, says Calhoun.

Published: June 16, 2008

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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.