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Home prices fall sharply in valley

BY SUE MCALLISTER
Mercury News

The median price of Santa Clara County homes sold in April dropped 5.4 percent from April of last year to $530,000 -- the biggest decline in more than a decade -- largely because of slower sales of high-priced homes.

The number of unsold homes continued to rise, as prospective home buyers waited to see if prices keep falling and whether the Silicon Valley economy stabilizes. Prices also fell in San Mateo County but continued to rise in Santa Cruz County.

The median price -- measuring homes sold from the Multiple Listing Service -- fell from the April 2000 mark of $560,000, which was last year's highest monthly median price. That is the first year-over-year drop in the median sales price since November 1994, when it dropped 3.2 percent. It's the biggest price decline since November 1990, when the median price fell 6.3 percent amid a national economic recession. The April median price was down 6.2 percent from the previous month.

``Any time you lose your high-end market, your median is going to drop because you're now selling more low-end homes than high-end,'' said real estate broker Richard Calhoun, who compiled the data for REInfolink, the multiple listing service for Santa Clara County.

Just 682 homes closed escrow in the county in April, a 19 percent decrease from March and a steep 40 percent fall from one year ago. The number of homes for sale continued to accumulate: There are 4,208 houses on the market and 1,247 condominiums. Last year at the same time, 1,499 houses and 352 condos were available. The average home now spends 31 days on the market, compared with 18 days one year ago.

``If you're a buyer . . . you ought to be out in the street right now, because you're not going to have much competition,'' said Michael Mullinix, president of the Santa Clara County Association of Realtors.

The new numbers measure home-sale transactions that closed in April, meaning most of the deals were struck in March and February.

Calhoun also looked at Santa Cruz and San Mateo counties.

In San Mateo County, the median price dropped 5 percent in April from the previous month and 8 percent from a year ago. The average number of days that a home was on the market increased, and the number of homes sold declined.

In Santa Cruz County, the median price rose 6.2 percent in April, as prices remained strong there. The number of homes for sale increased, as did the measure of average days on the market.

While the slowdown in sales has been a trend since the beginning of this year, April was the first time that Santa Clara County's monthly median price was less than the one recorded during the same month the year before. The median marks the halfway point, meaning that half the homes sold for more than the median and half sold for less. Comparing a month to the same month in the previous year helps take into account seasonal differences, such as the winter holidays and summer vacations.

Monthly fluctuations should not be used to gauge long-term trends. But the precipitous change in the median is notable, Calhoun said, because it illustrates how much sales of expensive homes have slowed in recent months.

Among homes in the county priced at more than $1 million, there is about 240 days of supply on the market, Calhoun said. In other words, at April's pace, it would take about 34 weeks to sell all the homes currently available in that price range. But among homes priced under $500,000, for example, the available supply would take only 12.5 weeks to sell.

Mullinix and other realty agents said sales have begun to pick up again in the past few weeks. That's normal in spring, but some agents also say buyers are gaining confidence from a stock market that might have stopped its free fall.

San Jose's Silver Creek Valley is one high-priced neighborhood where the number of houses for sale has been growing. Although homeowners know values have ebbed since last year, most are confident that the community's large, newer homes, good schools and safe streets will keep them from slipping much further.

``The general understanding of how demand works up in the Silver Creek area in recent years is that it's one of the areas where there's almost a direct correlation between the stock market and the demand for those gated-community homes,'' said San Jose City Councilman Dave Cortese, who represents the area. ``With the market depressed as it is, it stands to reason there's going to be a severe drop-off in demand.''

There are about 75 homes for sale in the Silver Creek Valley listed at $1 million or more, say agents who specialize in the area. That compares with 25 to 30 at the beginning of the year, and about 20 at this time last year.

``Calls are increasing from buyers,'' said Eric Anderson of Realty World, who has been selling real estate in San Jose's Evergreen and Silver Creek areas for 16 years. ``Maybe buyers are perceiving that values are down and interest rates are down, and they're more curious now as to what can they buy.''

Anderson said values of homes in the $1 million-plus range have come down about 15 percent or 20 percent since their January peak.

By May 4, 2000, 21 homes in the area had sold for more than $1 million and those homes had spent an average 22 days on the market prior to sale, said Kate Davey of Windermere Silicon Valley Properties in Silver Creek. By May 4 of this year, 15 homes had sold for more than $1 million, after spending an average 49 days on the market.

Sellers have been reducing prices to generate offers, Davey said, and are now open to offers contingent on the buyers selling their current homes.

Homeowner Stuart Pringle has been trying to sell his four-bedroom, 3-year-old home in Basking Ridge, south of Silver Creek Valley Road, for about seven weeks without any offers. He was originally asking $749,000, but reduced the price to $729,000 after it had been listed a month.

``We certainly thought it would have been sold in two months, and now I'm looking to hopefully selling in three months,'' said Pringle, who admits to feeling frustrated. He wants to move with his wife and two sons back to his hometown, Toronto, to be closer to his family. ``We're very much interested in selling the home, and we're prepared to be as aggressive as we need to be.''

One of Davey's listings -- a four-bedroom home in gated Silver Creek Country Club -- was originally listed at $1.25 million. ``And that was a good comp,'' she said. But the sellers only got an offer after they dropped the price 20 percent, to $999,000.

``It's almost like buyers' revenge,'' Davey said, ``because they were getting slapped around pretty badly last year.''