The Real Deal

State home prices still high despite slump

By Jean Newton

Sales of existing homes in California in June fell 6.4 percent and the median home price rose 9.8 percent compared to the same period a year ago, according to a report recently released by the California Association of Realtors and Real Estate Solutions, a real estate information service.

"With June a historically strong month for home sales, this year is no exception," said California Association of Realtors President Gary Thomas. Sales [in June] hit their highest level so far this year."

Although home resale activity decreased 6.4 percent from last June, resale activity posted an increase of 4.2 percent in June 2001 compared to the preceeding month.

The median price of an existing, single-family, detached home in California during June 2001 was $266,930, a 9.8 percent increase over the $243,100 median for June 2000, the California Association or Realtors reported. The median price in June 2001 increased 5.1 percent compared to the previous month. In Santa Clara County the median home price increased from $540,000 one year ago to $546,000 in June 2001.

"We're continuing to see a divergence between the Southern California and the San Francisco Bay Area residential real estate markets," said Leslie Appleton-Young, the California Association of Realtors' vice president and chief economist. "The Bay Area market posted double-digit declines across the board. Southern California in contrast, experienced less of a decline in sales."

Nationwide, the forecast looks promising, according to National Association of Realtors chief economist Dr. David Lereah. "We expect the economy to gradually pick up steam during the second half of the year, yet inflation will remain tame. This should boost consumer confidence and keep the housing market rolling along at strong levels," he said. "Thirty-year fixed mortgage interest rates will rise and hover in the 7.3 range during the second half of the year, a little higher than we've seen but not enough to deter overall sales," he added.

The association expects the national median existing-home price this year to be $145,300, an increase of 4.6 percent over 2000, while the typical new home price is expected to be $174,300 in 2001, up 3.1 percent from last year.

The National Association of Realtors projects U.S. economic growth, as measured by the Gross Domestic Product, to be 1.7 percent for 2001, rising from a projected rate of 0.7 percent in the second quarter to 3.2 percent by the end of the year. Consumer price inflation for this year should be 3.3 percent.

The association projects the unemployment rate to rise to 4.8 percent by the end of 2001, still low in historic terms. Inflation-adjusted disposable personal income is forecast to grow 2.4 percent this year.

If interest rates stay low, unemployment rates remain steady and consumer confidence is high, the national housing market is expected to stay near historic highs according to the National Association of Realtors. In Silicon Valley, there are questions about employment and consumer buying. It is interesting, however, to compare the median home price in Santa Clara County at $546,000 to the projected national median price at $145,000.

---

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors. Send questions on any topic to: Real Deal, c/o SILVAR, ppompei@siliconvalley-realtors.org.

---

Monte Sereno tells developer to shrink plan, save trees

Carl Heintze: Birds in the City

Local home sale listings

Obituary: Francis Filer

Picture From the Past

Sports Briefs

Los Gatos Little League all-stars advance to Western Regionals

Little League 11-year-old all-stars claim Section 5 title

Pony League all-stars win section tournament

Annual Dammit Run returns August 18

Photo: The Club Yahoo! 12s