Joe Wilson's Silicon Valley Real Estate Blog

For Buyers and Sellers there's a lot of confusion and concern regarding the widely published drop in median home price in the Silicon Valley. Median home price in Santa Clara County has fallen by some 26% fom its lofty peak last summer. Does that mean all homes have lost 26% of their value? Not at all; unless you're shopping in a location and at a price point where most of the foreclosures and short sales have been concentrated. Median price is simply the price that the middle value home sold for. So, for example if 1000 homes sell in a month and you sort them in order from the most expensive to the least expensive, the 500th home's sale price is the median price. Now imagine what happens to the median price if most all of the homes that are selling are the low-priced foreclosures and short sales which is exactly what's been happening particularly in South county and East valley. The median price gets pulled dramatically lower because there are more low priced homes selling than moderate and high priced homes.  My point is that MOST homes in the Silicon Valley have experienced much more modest reductions in price, maybe 10-15% in total and SOME areas of the valley have done much better. Will home prices continue to fall? Well at this point, most all areas of the valley are showing signs of increased buying activity. In fact, many of the areas that had been the slowest and suffered the largest drops in price are now beginning to pick up sharply. (Listen to the Santa Clara County Association of  Realtors' Sept 30 audio market report here: http://www.sccaor.com/997.0.html)

If Congress passes the financial rescue bill which seems likely, price recovery should be accelerated although how much and how fast remains to be seen. Expect to see a dip during the traditionally slow holiday period, but unless something dramatic and unforeseen happens it looks like valley prices have bottomed and Chicken Little may be eating crow.