Contrary to popular but misguided belief, most Silicon Valley homes don't sell for more than the asking price -- and that's good, but likely fleeting news for buyers.
In a turn around from the region's hotter, more frenzied market earlier this year, when most homes sold for more than asking, only 48.3 percent of October's closed sales sold for more than asking.
Buyers picked up 33.5 percent of homes sold in October for less than the asking price and 18.2 percent of homes sold at the asking price, according to broker-statistician Richard Calhoun of San Jose-based Creekside Realty. Creekside Realty.
Calhoun's monthly "Santa Clara County Real Estate Market Update" says that doesn't mean most homes won't again sell for more than the asking price should market factors favorable to sellers converge as they have in previous years -- beginning just about at this time of year.
"I expect the market should continue to remain relatively calm, but only because of the impact of the upcoming holidays. All the indications are that Santa Clara County will continue to lose inventory and prices will start to increase," Calhoun said.
His monthly update extracts data from statistic's compiled by Campbell, CA-based R.E.InfoLink, the official multiple listing service and data provider for Santa Clara County and adjacent communities. R.E. InfoLink does not report percentage-of-asking price data to the media.
Along with buyers opting out of the market to prepare for the holidays, a bearish stock market also gets credit for fewer homes selling for more than the asking price in October.
Silicon Valley workers' paychecks are often padded with stock options and other stock-related compensation, but since April's stock market downturn, fewer stock holders have been able to generate sufficient returns to parlay them into home purchases.
Only 17 percent of greater San Francisco Bay Area home buyers used stock sale proceeds as their primary down payment source in the second quarter this year, compared to 24 percent in the first quarter, according to the California Association of Realtors.
"Tech Stocks and House Prices in California," a San Francisco Federal Reserve Bank study, recently quantified the effect of fewer stock-market generated sales.
The study says for every 10 percent increase in the stock market prices of San Francisco Bay Area tech companies, the region's home prices jump 1 to 2 percent. The reverse is also true.
However, just as more buyers are leaving the market to enjoy the holidays, so are sellers. Fewer homes are selling for more than asking, but decreased inventories are preventing prices from falling. Now $135,000 more than they were at this time last year, median prices for single family homes continue to rise, but at a slower pace than earlier this year.
The median price of closed single-family home transactions increased to $530,000 in October compared to $395,000 in October 1999 and $505,000 from September 2000.
Still, today's prices are somewhat of a bargain compared to prices in the spring.
"This is still $30,000 below the peak of $560,000 for April. I would expect prices to remain roughly level until the first of the year and than watch out, as I expect prices to jump," Calhoun said.