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Perkins on Real Estate

High-end sales quirk provides boost to median home price

By Broderick Perkins

The cost of single-family homes in the topsy-turvy Silicon Valley housing market jumped $50,000 in one month, but that's likely because of a month-end closing rush on high-end homes.

Despite the jump, sales are flat, listings languish unsold on average nearly twice as long as they did last year and buyers are paying sellers just under 100 percent of the asking price.

Silicon Valley's median price of single-family homes roared to $790,000 in February, up from $740,000 a month earlier and $765,000 a year earlier.

The surprising jump comes on the heels of January's median of $740,000, which was the same a year earlier, in January 2006.

The flat January-to-January price, more indicative of the market's true pricing trends, reflected what had been a downward or flat movement in home prices since early last summer, according to San Jose-based Creekside Realty broker Richard Calhoun's Bay Area Real Estate Market Newsletter.

Home prices in Silicon Valley peaked at $819,950 in June of 2006, but by January this year prices had fallen nearly 10 percent to $740,000.

February's market did a good job patching up losses in the median home price, but the prognosis isn't for a rebounding market.

"You have to be careful. The data is monthly and when you look at it on a weekly basis, that $50,000 occurred all in the last three days of February, when a lot of high-end homes closed. There was a disproportionate increase in high-end closings," said Calhoun.

Indeed, the quirky data reflect much disparity throughout the market.

Single-family home prices fell year-over-year in Campbell, Cupertino, Santa Clara and Sunnyvale, but they rose in Milpitas, Mountain View and San Jose.

In the South County, the Gilroy-Morgan Hill-San Martin region as a whole revealed a median home price increase, while individually, Morgan Hill's home prices lost ground, Gilroy's gained and San Martin's four $1 million home sales weighed heavier than last year whenthere was only one $1.1 million sale.

Similar disparity is found around the county when considering the January-to-February price changes. Some cities had rising prices, others had lower prices.

"There's also a huge geographical diversity in how fast properties are selling. The expensive geographic areas are making up a large percentage of sales and they are selling with multiple offers. Other areas are having price depreciations. It shows you the market is not in equilibrium," Calhoun added.

Warren Winsness, president of the Santa Clara County Association of Realtors, said there is generally more open house activity than in recent months, and sellers are taking time to prepare their homes for market to make them more visually attractive to potential buyers.

"I'm seeing a lot more buyers who are active. They are coming to realize maybe prices aren't going down," said Winsness, also broker owner of Winsness Realty in Los Gatos.

"Employment is better; people are getting realistic. They want to move," he added.

Perhaps that's true for some markets, but the general trend of lower home prices is also beginning to show up in assessed values.

The Santa Clara County Assessor's office recently reported the number of homes with reduced assessed values would near 16,000 this year, compared to slightly more than 5,000 in 2006 and nearly 3,000 in 2005.

The market is also out of whack by type of housing.

Instead of rising, the median price of condos took a hit, moving from $515,000 a year ago in February down to $505,000 this year. In January this year, the median condo price was $518,880, according to Calhoun.

Even with a lower median price in the condo sector, February condo sales, at 327, were as strong as they were a year ago at 325. In January, only 273 condos sold in Silicon Valley.

"I don't think the median is that significant. Look at the number of closed sales from last year. They are nearly identical," said Tony Sum, broker owner of Silicon Valley Lofts and Condos, a real estate company with a focus on the growing downtown market of mostly new condos, town homes and lofts, which are creating a growing resale sector.

"[Condos] are more affordable for more people, so you get a lot more people who can afford condos rather than single-family homes," Sum said.

He conceded both condos and single-family homes are taking nearly twice as long to sell as they did a year ago, from an average of about 45 days in February 2006 to 72 days this year, for both types of housing.

"Buyers are just talking their time to search for the right property," Sum said.

Real estate writer Broderick Perkins, executive editor of San Jose-based DeadlineNews.Com, writes regularly for this newspaper.