About the only thing that didn't sizzle during Silicon Valley's heat wave in July were home prices as buyers gave sellers the cold shoulder, more and more often refusing to pay the asking price.
With home buyers paying an average of only 99.6 percent of sellers' asking price, the median price on single-family detached homes in closed sales dropped to $805,000 in July, $15,000 off June's $819,950 median -- a record for the market.
This was the largest median drop since August to September 2005 when the median tanked by $27,000 before roaring back to the record high this June.
Sudden, large, up or down ratchets in home prices are not unusual in Silicon Valley, but this slip likely isn't just a blip, say experts, who for months were confounded by rising prices amid falling sales and growing inventories.
Now, higher mortgage rates, combined with unaffordable home prices are taking a toll on buyers.
"I think this is the start of price declines that I first thought would happen in February of 2006. So missing by six months isn't too bad," said Richard Calhoun, broker-owner of San Jose, CA-based Creekside Realty, who uses official R.E. InfoLink multiple listing service data for Santa Clara County in his Bay Area Real Estate Market Newsletter.
If just barely, it's buyers' market, according to the Internet-based RealtyTimes.com's Market Conditions, a report based on input from dozens of real estate agents keeping tabs on the Silicon Valley market.
For the area's largest city, San Jose, the Santa Clara County (Silicon Valley) seat, the report reveals an "Average Current Market" rating of 2.6 on a scale of 1 (Buyer's Market) to 5 (Seller's Market) where 3 is a balanced market and anything less is in buyers' territory. The "Average Current Price Trend" rating of 3 on a scale of 1 (Falling Prices) to 5 (Rising Prices) indicates a flat price trend, with prices not rising or falling.
While the median price remains $55,000 higher than it was a year ago, no one disputes sales are off, homes take longer to sell and inventories are shoving the market deeper into the buyers' corner.
"It definitely is. There are not as many 'as-is' offers anymore. Buyers are coming in $5,000 and $10,000 under asking and asking for work to be done. Even in Saratoga, Sunnyvale and Cupertino, where the good schools are, they are seeing more inventory and there probably will be a price drop," said Daunielle Doughty, a real estate agent with the San Jose Intero office.
In July, inventories on single-family homes, countywide, were up to more than 4,000 -- 200 more than a month ago and nearly 1,100 more than a year ago.
"The inventory (condos and single-family homes) is at 5,500 right now. That's almost double where we were a couple of months ago," said Doughty in early August.
Silicon Valley home sales dropped to 973 in July, down from 1,192 in June and 1,417 in July 2005. Also in July, homes, on average, took 40 days to sell, compared to 35 days in June and only 25 days a year ago.
"If you look at the outskirts of San Jose in the Gilroy area, they are definitely taking a hit right now. The average time on the market is almost 60 days and homes are really dropping in prices $30,000 to $40,000 to get it sold. Downtown San Jose is slowing down," said Doughty.
That's not just anecdotal evidence.
Calhoun's report shows homes languishing on the market an average 71 days in July in South County -- Gilroy, Morgan Hill and San Martin -- where buyers, on average, were giving up just 97.6 percent of the asking price.
Just to the north, in the Almaden Valley area, the average selling period was 43 days and buyers were only paying, on average, 98.1 percent of the asking prices.
Meanwhile, buyers in Cupertino, Sunnyvale and Santa Clara were still paying, on average, slightly more than 100 percent of the asking price and homes took only 20 to 25 days to sell in July.
But sales continue to fall in virtually every corner of Santa Clara County as they have for months now.
The relatively more affordable condo segment cooled more slowly.
The July median condo price was off by only $2,500, falling to $512,500 in July, compared to $480,000 a year ago. Inventories rose from 1,291 in June to 1,431 in July, compared to 868 a year ago, as sales slipped from 479 in June to 422 in July this year, compared to 581 a year ago July.
Condo buyers were still paying, on average, an even 100 percent of sellers' asking price in July, but that was down from 100.5 percent in June and 103.3 percent a year ago.
"Homes coming down in price are homes that were priced too high to begin with," said Robert Aldana, an agent with LetsTalkRealEstate.com.
"Sellers are getting a clue as to what their home is really worth and not what they want it to be worth or what they think it is worth because of the crazy seller's market that they have been seeing during the past few years," he added.
Aldana said in addition to lowering prices, sellers have begun to pay closing costs and toss in other incentives to move their home in the more competitive market, but, relatively speaking, sellers still have some room to negotiate.
It's an only-in-a-Silicon-Valley's-buyers' market proposition.
"You will still have to pay market value because of where we live. The demand for housing still is strong and people are continuing to move to this area which will keep the real estate market strong. Strong, but not crazy as we have seen it," said Aldana, also a director with the California Association of Realtors.