Realtor Therese Swan of Alain Pinel Realtors, who attended the meeting, said Appleton-Young stressed that one of the chief factors affecting the local economy was housing affordability. "Only 26 percent of households in Santa Clara County can afford to purchase a median-priced home. Appleton-Young talked about how people are leaving the local area to move to the Central Valley where it is more affordable. This is a trend that has already started to happen. Population growth for Santa Clara County has remained flat through 2002," Swan said.

The percentage of households in California able to afford a median-priced home stood at 26 percent in July, a 2 percent decrease compared to the same period a year ago when the Index was at 28 percent, according to a recent report by the California Association of Realtors. The July Housing Affordability Index (HAI) declined by 1 percentage point from June, when it stood at 27 points.

The minimum household income needed to purchase a median-priced home at $383,320 in California in July was $86,440, based on a typical 30-year, fixed-rate mortgage at 5.39 percent and assuming a 20-percent down payment. The minimum household income needed to purchase a median-priced home was up from $80,260 in July 2002, when the median price of a home was $321,900 and the prevailing interest rate was 6.55 percent.

Locally in Santa Clara County, homeowners attempting to sell their homes experienced a great second quarter. There were 1,326 homes sold in June 2003, up 11.8 percent from June 2002. The median home price was $565,000, down 1.7 percent from last year, said Swan.

"On the down side, the unemployment rate in Santa Clara County as of July 2003 was 8.4 percent. Appleton-Young pointed out that even though the economy is beginning to rebound, the productivity improvements due to technology have stalled the reduction in unemployment rates compared to previous business cycles," Swan said.

With interest rates showing a modest increase, Appleton-Young pointed out that the affordability factor in Santa Clara County could fall from its already low levels, said Swan. This could mean that homeowners in the area might not see the great levels of appreciation in home prices that they have been used to in previous years.

However, according to Senior Economist Robert Kleinhenz, the year is shaping up to be an excellent year for home sales in California. The median price is expected to climb 15 percent over the 2002 median-home price to set another new record.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.