New record-high home prices went on the books in Silicon Valley, but home sales are down and under pressure from a mortgage supply squeeze that's leaving entry-level buyers twisting in the wind.

Local experts say the $40,000 February-to-March jump in the median price of single-family detached homes and the $25,000 increase in condos and town homes is more a reflection of reduced buying in less expensive areas and, to a lesser extent, greater sales in more affluent areas.

The unusual market trend makes it crucial for buyers to immerse themselves in local buying market conditions, firm up their reason for buying -- to occupy or to invest -- and to nail down how long they plan on holding onto the home.

"It's not just about median prices," says Richard Calhoun, broker of Creekside Realty in San Jose.

"Usually when it's a good time to buy in the county, it's a good time to buy everywhere. It's not usually hot and cold in the same county. We are having a market that appears to be split along geographic boundaries," he added.

The median price of single family homes reached a record $830,000 in March eclipsing the old record of $819,950 set back in June of 2006, according to Calhoun's Bay Area Real Estate Market Newsletter. The new record represents a $90,000 jump in the median home price in two months.

The report, which is comprised of statistics from the area's multiple listing service, RE InfoLink of Campbell, CA also reveals a new median price record for condos in March, $530,000. The last record was set earlier this year in January when the median came in at $518,880.

Meanwhile, however, sales of all homes (single-family and condos) where down to 1,306 in March this year, compared with 1,647 in March 2006.

Experts say reduced buying in the less expensive areas is directly related to stiffer loan requirements and lenders' curtailment of riskier loans, following an increase in foreclosures and more regulatory pressure to tighten the purse strings on easy mortgage money.

"It's because of tightening of lending requirements at the entry level while the higher end is still going strong and generating a larger portion of the total sales," says broker Rick Campbell, who publishes REReport.com, a statistical breakdown similar to Calhoun's newsletter.

With foreclosures actually falling by 49 percent from February 2006 to February 2007, according to foreclosure tracker, RealtyTrac.com, Silicon Valley has weathered the foreclosure storm better than most regions.

During the same period, nearby counties Alameda (up 132 percent); San Francisco (up 93 percent) and San Mateo (up 53 percent) all suffered rising rates. Statewide, foreclosures were up more than 78 percent and nationwide they rose by 11 percent during the same period, according to RealtyTrac.com.

Unfortunately Silicon Valley, like other markets nationwide, can't escape foreclosure fallout.

"Many lenders have done away with 100 percent financing and Freddie Mac will only buy (adjustable rate mortgages, or "ARMs") loans that qualify at the fully-indexed rate. That's having a big impact on the low end," said Campbell.

In addition to surviving lenders backing off subprime and other risky loans, the pool is drying up because other lenders have closed up shop due to risk averse investors, buyers who can't afford high-home prices and resultant insolvency.

Paul Garcia, broker owner of Pacific Blue Equity in central San Jose says 100 percent loans that used to go to first-time home buyers with credit scores of 660 to 680 and no rental history, are, well, history.

"Even with a score of 760 or higher it's a pain to get these loans through. Only a few banks are doing them. And these are people have $150,000 cash in the bank, are buying owner-occupied and have good incomes. It used to be a slam dunk and now they are nitpicking," Garcia said.

At the other end, buying in more affluent areas is supported by Silicon Valley's slowly but steadily growing economy, which, in the year ending in February, enjoyed a 2.4 percent growth in the number of jobs. The high-paying computer sector was the region's largest job-producing sector during the period, according to California's Employment Development Department.

The unemployment rate in the Silicon Valley was 4.6 percent in February, down from 5 percent a year ago and lower than 5.2 percent for California and 4.9 percent for the nation, the state department reported.

"We have a lot of professional people associated with the technology industry," said Warren Winsness, president of the Santa Clara County Association of Realtors.

"I don't think they (reduced risky loans) made that much difference. A lot of buyers out there recognize that interest rates are low and they want to buy a home. I sold two houses last week in multiple offer scenarios," he added.

However, Winsness, broker owner of Winsness Realty in Los Gatos, conceded, "I don't find a lot of people looking for fixer-uppers. You really do have to look at the different markets."

That's just what Calhoun did to explain the disparity between record high prices and falling sales.

"It's more a matter of subprime (and other risky) loans causing the low end to go bye-bye, than it is because of the high end getting a larger percentage of sales," Calhoun said.

According to Calhoun:

• Silicon Valley's "low end" (Central and downtown San Jose, East Valley, South San Jose), where prices are cheapest, typically accounts for 16 percent of the home sales in the market. Now sales comprise only 12 percent of the market, a loss of 30 percent of the volume.

  "The low end is where you have all the inventory so the desirable areas are driving up the median. The numbers are misleading and they freak you out," said Manuel De Neves, a real estate agent at Fireside Realty in San Jose's Willow Glen area.

• The "moderate" areas (Santa Teresa, Blossom Valley, Evergreen, Willow Glen, North Valley, Santa Clara and Campbell) typically account for 52 percent of home sales and has remained the same at about 51 percent.

• The "moderately expensive" region (Cupertino, Sunnyvale, Mountain View, Almaden Valley) typically account for 22 percent of Silicon Valley's home sales now brings in 26 percent, up 20 percent.

• The most expensive areas the "high end" (Los Gatos, Saratoga, Palo Alto, Los Altos and Los Altos Hills) normally account for 8 percent of the market's sales, now account for 11 percent, a 20 percent growth.

Silicon Valley's median price also gets a boost when contracts come in with prices higher than the asking prices. That happens more often in the moderately expensive and high-end sectors.

Countywide, the median sales price on single family homes was, on average, 99.7 percent of the asking or list price in March. However, in Mountain View, the median sales price was, on average, 105.9 percent of the asking price; Sunnyvale, 103.7 percent; Palo Alto, 102.5 percent and in Los Altos, 101.8 percent, according to Calhoun's numbers.

"Real estate agents have to spend more time coaching clients to find out what their needs are and what they plan so they can make an informed decision. It's not just median prices, but also information about differences in the areas," said Calhoun.