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Prices stop downfall in Silicon Valley
By Justin Hunter
What originally sounded like good news
is now producing mixed reactions. After
a couple of months of drastic home price
decline’s in Silicon Valley (one
of the U.S.’s most expensive real
estate areas), September provided
a level, ending the freefall ride for
prospective buyers.
Buyers were hoping to at least see prices
plummeted for the rest of the 2006 year
and be able to afford a property. Now
it is anyone’s guess whether prices
will continue to drop (probably not)
or rise once again.
Columnist, Broderick Perkins, explains
how the Silicon Valley market may predict
other U.S. markets, in his October 10,
2006 article, “Silicon Valley
Slide Levels Out” posted on Inman
News.
This report of a virtual stop to lowering
home prices comes as a shock as sales
continue to decline thus raising the
amount of available listed properties.
“Even as the housing slowdown
trend continued with rising inventories,
fewer sales and longer listings for
homes that managed to attract buyers,
the median price of single-family detached
homes lost only $1,000.”
“Prices fell from $770,000 in
August to $769,000 in September this
year, remaining nearly 5 percent above
the median price in September 2005,
according to Richard Calhoun, a San
Jose-based Creekside Realty real estate
broker.”
This measly $1,000 decrease comes after
the median single-family home price
had dropped $50,000 (6.1 percent) during
July and August, which was the largest
dollar amount median price decline in
California history, according to Calhoun
who also publishes the Bay Area Real
Estate Market Newsletter.
So what does this mean for buyers
in Silicon Valley? Should buyers across
the rest of the U.S. act now out of
fear of the price decline halt?
“‘Buyers in Silicon Valley
are taking their time. If there ever
was a time to do that this is it,’
said Edwin Resuello, president of Santa
Clara County Association of Realtors.”
There has already been a significant
difference in the market from September
2005 to September 2006.
Calhoun reported that buyer’s
were only paying an average 99 percent
of the seller’s asking price in
September of this year, compared to
paying 100.7 percent just one year ago.
“Most of the median price
loss in September came from Santa Clara
County's largest city, San Jose, the
county seat, where the median price
dropped this year from $721,000 in August
to $715,000 in September.
The vast majority of other cities in
the county, even the generally softer
South County (Gilroy, Morgan Hill and
San Martin), revealed solid month-to-month
price increases.”
Although month-to-month home price declines
may not be significant for the rest
of the year, Silicon Valley may experience
year-over-year declines by the end of
the year, much like the neighboring
counties of Santa Cruz and San Mateo
“‘It is only a matter of
time, before nominal home prices are
down on a year-over-year basis,’
said University of California Los Angeles
(UCLA) Anderson Forecast senior economist
David Shulman said in a third quarter
report ‘Soft Landing with Turbulence
Ahead.’”
What this means for the immediate future
of home buyers is unforeseen. Your home
may have lost value if you purchased
it a year ago, but current buyers may
either want to act now before prices
go back up or wait and hope prices decline
more.