Cooler SF Bay Area Remains Nation's Least Affordable Metropolis by Broderick Perkins With list prices of single-family home sales falling $40,000 in July and closed sale prices reflecting an increase of only $7,000, Silicon Valley's home buyers continue to get some relief in the cooler market. Fifty miles to the north, San Francisco's affordability index dropped into record single digits as the greater San Francisco Bay Area nevertheless continues to swelter with the nation's least affordable housing. "During the last week, I saw several properties reducing their asking price by 5 percent. It has been a long time since I have seen price reductions like this," said Richard Calhoun, broker-owner of Creekside Realty in San Jose. Santa Clara County's (Silicon Valley) median list sale price fell from $539,975 in June to $499,900 while closed sale prices rose from $540,000 in June to $547,000 in July, according to the Santa Clara County Association of Realtors.. Reflecting more recent activity, lower list prices indicate the possibility of further declines in actual closed sale prices -- prices buyers actually pay. "I don't think this is a wholesale change in the market. I believe it is simply some people got caught up in the run-away market we experienced earlier this year and are now waking up and realizing that the market did in fact change some time ago," said Calhoun, who tracks Silicon Valley market trends and statistics. Calhoun said both list and closed sale prices should be more in line with each other by fall if price hikes continue to moderate, multiple offers lessen and inventories grow. He put the days of inventory (DOI) at 44.6 in July, compared to only 22.6 in January. DOI is a theoretical figure indicating how long it would take the current sales pace to deplete the current inventory. "This needs to be kept in proper perspective. We were so far into a seller's market that it was ridiculous. I expect the market to continue to move more toward a buyer's market, however, I will stop short of saying I expect a buyer's market anytime soon," Calhoun said. Overall, current price levels indicate price increases of about $150,000 since last July, with $100,000 of it just since January this year. Silicon Valley home prices more than doubled since the run up in prices began in the early 1990s. "Buyers should be preparing to purchase right now. An ideal window will arrive between Labor Day and Halloween and may last until New Years," Calhoun said. "Sellers should try to wait until March 15 to April 15 of 2001. This will allow the seller to experience next year's appreciation. I see no reason why it won't be as much as it has been this year," he added. June affordability Meanwhile, an hour's drive to the north, less than one in 10 households can now afford the median priced home in the city and county of San Francisco, where the affordability index dipped to a record 9 percent in June, according to the California Association of Realtors. San Francisco's affordability index was followed by Contra Costa County at 12 percent and San Mateo with 13 percent. Santa Clara, Monterey, and Northern Wine Country counties all clocked in at 16 percent, the same overall index shared by the nine-county San Francisco Bay Area, the association reported. In Southern California, San Diego County was the least affordable at 23 percent, followed by Orange and Ventura counties at 25 percent. Los Angeles County's affordability index was 39 percent. California's most affordable housing remained in the High Desert region where 69 percent of households could afford the median priced home. Statewide, housing affordability fell to 30 percent in June, down 6 percentage from a year ago. Nationwide, the rate was 52 percent, down from 54 percent a year ago, the state association said. | 
