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Chances are, most of California won't suffer the same residential real estate market volatility that's gripping the San Francisco Bay Area.

Real estate markets in San Diego, Los Angeles, Orange County and other areas are experiencing fallout from the softer economy, but not the reversal of fortunes that's reeling the San Francisco Bay Area real estate markets.

All California real estate markets should resume their forward, upward march next year -- albeit more slowly -- after 2001 provides a sharp reminder of just how volatile some of the state's markets can be.

"We've been saying for some time that the real estate market in California would slow down this year and that's definitely happening across the state," said Robert Kleinhenz, senior economist with the California Association of Realtors.

"In the San Francisco Bay Area, including Santa Clara County (Silicon Valley), it's no surprise that the market is softer than the state as a whole. It's not just because of the cut backs in dot coms, but prices were so inflated to begin with, it was just a matter of time before it came down to earth," Kleinhenz said.

Calling the Bay Area markets "softer" may be an understatement.

In Silicon Valley, inventories swelled and demand slumped earlier this year, but rising prices continued to thwart a full-fledged buyer's market until just last month when a record price slump signaled the start of what could be a protracted buyer's market.

Single-family median home prices plummeted $35,500 in a single month from March to April in Santa Clara County this year -- a 6.19 percent month-to-month decline in home prices that is nearly identical to a longer year-to-year price slump from 1989 to 1990, according to the latest edition of the Bay Area Real Estate Market Newsletter. The year-to-year price drop occurred a decade ago when Silicon Valley's housing market crashed into recession along with the state's economy.

"That shows the magnitude of it. Everybody acknowledges the year-to-year drop was big. Here, in one month the median price lost the same percentage. Real values have dropped significantly more," as much as 24 percent since the first of the year, said the newsletter's author, Richard Calhoun, San Jose-broker and owner of Creekside Realty.

The newsletter also said the single-family median of $530,000 in April, was down from $560,000 in April of last year, 2000's highest level, and down from $565,500 in March this year.

Also, home sales in Santa Clara County dropped a whopping 39.5 percent in April, 26.3 percent throughout the nine-county San Francisco Bay Area, according to the California Association of Realtors.

"I don't think we'll see that kind of movement statewide. For the state as a whole, the thing that looms behind it all is the continued shortage of housing. That's always going to loom behind the scenes and prop up prices that would otherwise soften. A lot of people still want to live here and have the wherewithal to do so," Kleinhenz said.

That's not what happened in the late 1980s to early 1990s when Northern California fell first, followed by the rest of the state as employers fled, incomes dwindled, quakes rumbled, sales fell and prices slipped.

What's different this time is that concerns over lost jobs and dwindling stock market returns are largely concentrated in the San Francisco Bay Area.

The April prices aren't in yet for Southern California, but the first quarter revealed double-digit, year-to-year percentage increases in median home prices in some Southern California regions that were larger than those in Northern California, according to CAR.

Meanwhile, first quarter sales were down from the first quarter of 2000 by 18.9 percent in the San Francisco Bay Area, including 28 percent in Santa Clara County, while during the same period sales in Los Angeles fell only 2 percent. Orange County was down 3.2 percent and San Diego 9.7 percent. Santa Barbara County was the Southern California exception. Sales were off 19.5 percent.

Better days are ahead for the entire state.

"Statewide there is a more gradual appreciation. The state is catching its breath this year before resuming growth. It won't be at the high levels of the past few years, but next year it will pick up compared to this year," Kleinhenz said.

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