Hot Silicon Valley Slowest Price Gainer In Regional Market
by Broderick Perkins
In California's San Francisco Bay Area -- the land where sales my fall, but prices still rise -- Silicon Valley's 18.2 percent increase in home prices over the past year is often small potatoes. From the city/county of sourdough bread to wine country, all counties in the San Francisco Bay Area's 9-county housing market over shadow Santa Clara County (Silicon Valley) in terms of home price appreciation. The median price of housing -- new and resale single-family detached homes, condos and townhomes -- was a record $549,000 in February, up 2.8 percent from $534,000 in January, and up 20.1 percent from $457,000 in February 2004, according to La Jolla, CA-based DataQuick Information Systems. In February this year, 7,463 new and resale homes sold in the region, down 0.6 percent from 7,509 for the previous month, but up 0.7 percent from 7,412 for February last year, DataQuick reported. "The strength of the market has certainly taken economic forecasters by surprise. Interest rates have been edging up the past month. Generally when that happens, buyers jump to get in before rates increase any further. We can expect a strong March and April, at least," said Marshall Prentice, DataQuick president. While Silicon Valley had the smallest percentage increase in home prices, Sonoma County, northeast of San Francisco and west of Napa County, enjoyed the largest. Its 28.5 percent home price increase represents a median jump of $111,000 in 12 months from $390,000 last February to $501,000 last month. Hosting it's own expanse of vineyards, an extensive coastline, Sears Raceway and Bodega Bay (site of Alfred Hitchcock's "The Birds"), Sonoma's housing market isn't without it's own suspense, or horror, depending upon your perspective as a buyer or seller. "Sonoma's home value appreciation is hot," Banker's Realty's Ginger Hopp reported to RealtyTimes' Market Conditions for Sonoma County. "Home sales are very sensitive to mortgage rates. The cost of financing remains historically low and I think strong demand should push home sales to another record high this year," Hopp added. DataQuick says home prices throughout the region are going up at their fastest pace in four years. Bay Area buyers committed themselves to a typical monthly mortgage payment of $2,460 in February this year, an all-time high. A year ago it was $2,008. One county northwest of Santa Clara County, in San Mateo County, home sales were flat but prices rose $119,000 in the past year from $567,000 to $686,000 an increase of 21 percent. "It's still a strong seller's market with low inventory levels. Low interest rates are still fueling the demand," said Cashin Company's Jim Tierney, reporting to RealtyTimes' Market Conditions for San Mateo County. "Most homes under $1 million are selling quickly and with multiple offers," Tierney added. Despite frequent warnings about housing bubble conditions -- over inflated prices doomed to pop -- DataQuick says there are few distress signals in the Bay Area Market. "Foreclosure rates are low, down payment sizes are stable and there have been no significant shifts in market mix," DataQuick reported. Even the less technology endowed Alameda County did better than Silicon Valley. Home prices rose $83,000 from $429,000 to $512,000, a 19.3 percent increase. "We have seen such a large surge in home prices, that many believe this trend cannot continue," said Gallagher & Lindsey, Inc.'s Don Lindsey, reporting to RealtyTimes' Market Conditions for Alameda County. "While I do expect home prices to fall, I think there is a possibility that prices may stay flat. Just make sure you can afford whatever payment is current or in your future. Variable rate loans should be converted to fixed rate loans," Lindsey added. Elsewhere in the region, by county, Contra Costa home prices rose 21.1 percent; Marin, 18.6 percent; Napa, 19.2 percent; San Francisco, 21.6 percent; Solano, 25.5 percent. | 
