Home prices rise to record
BUT APPRECIATION SLOWS ALONG WITH AREA SALES AS MARKET LOSES STEAM
By Sue McAllister
Mercury News

Santa Clara County's median home price hit a record $735,000 in March but the double-digit annual appreciation of years past is slowing, providing further evidence of a cooling real estate market.

The median price of a previously owned house was up about 2 percent from $722,000 in February and up nearly 11 percent from March 2005, according to figures released Wednesday by DataQuick Information Systems, which collects the data from public records.

Santa Clara County prices rose more than in the Bay Area as a whole

In the nine-county region last month, the median sale price of previously owned houses was $655,000, up 8 percent from March 2005. That marks the first time since October 2003 that price increases have been in the single-digit range, according to DataQuick.

Year-over-year appreciation was in the single digits in San Diego and Sacramento counties as well, said DataQuick's John Karevoll, who noted he expects price increases to dip similarly in Santa Clara County.

``That's the way it's trending statewide,'' he said. ``It's going to happen everywhere, it's just a question of is it next month or the month after, or the month after that.''

This week, meanwhile, the number of houses and condos for sale in the county inched up to about 2,930, following a small dip before the Easter weekend. Last year at this time, about 2,070 homes were for sale.

Some in the real estate business say the recent stretch of bad weather has hampered sales, discouraging sellers from listing their properties.

``The sun's out and I think that will breathe more life into the market,'' said Fred Hibbert, managing broker at a Coldwell Banker office in Los Altos. ``It has been slow, people have been staying indoors because of the rain, no question.''

Still, he said, in more than half the sales reported by his agents this week, the homes received more than one offer.

Which homes are selling fastest? The lowest-priced ones, plus those in Palo Alto, said Richard Calhoun, owner of Creekside Realty in San Jose, who crunches local real estate numbers daily.

At the current sales pace, it would take just 37 days to sell all the homes in the county priced under $750,000, he said. And there's just a 29-day supply of homes on the market in Palo Alto. ``Part of Santa Clara County is still in a sellers' marketplace,'' he said.

In contrast, it would take seven months to sell what's available in the $2.5 million to $5 million range countywide, and more than three months to sell what's for sale in Los Gatos.

Calhoun said sales of high-priced homes have slowed since the year began, while sales of less expensive homes are accelerating.

No one knows whether the changing market dynamics will result in lower prices across the board. DataQuick's Karevoll called the slowdown in price increases a normal part of the real estate cycle following the sales frenzy of 2004 and early 2005.

``The big question on down the line is as this line trends down, is it going to go negative?''

The last time Santa Clara County houses experienced a negative rate of appreciation was in July 2003, when the median price dropped 1.2 percent from the same month a year earlier, to $509,000.

The county's appreciation rate hasn't dipped below 10 percent since February 2004, when the median price rose 7.1 percent from the year before, to $525,000.

Rising interest rates, a jump in inflation or shakiness in the Bay Area's job market all have the potential to thwart home sales, which in turn could drive down prices.

In keeping with a trend that began last year, the number of homes sold in the region was down in March compared to March 2005.

A total of 6,410 previously owned Bay Area houses sold in March, 15 percent fewer than a year earlier. Condo sales were down 18 percent.

In Santa Clara County, 1,592 previously owned houses sold last month, down nearly 15 percent compared with March 2005. Almost 17 percent fewer condos sold. The median price of condos sold in the county last month was $483,000, up 14 percent from March 2005, but down from a peak of $500,000 in February.

The data are for sales that became final in March, meaning the transactions likely began in January or February.

Karevoll said if the number of transactions continues to fall on an annual basis for another year or so, that could also tug prices down.
Contact Sue McAllister at smcallister@ mercurynews.com or (408) 920-5833.