In the dot.com bust of 2000-2001, when 400,000 jobs were lost, prices declined 17% over a ten month span for a 2001 median price of $525,000. In the post-9/11 recession in 2002, prices declined 11% in 8 months for a 2002 median price of $545,000. Per our local MLS database, as of the end of August 2006, the median price is $770,000 and the percentage of List Price received was 99.39% in Santa Clara County.
In 2001 interest rates averaged 8% and 2002 the average was 7%. Today's rates are in the mid 6% range and conforming loan limits are higher.
Currently, disposable income is rising and inflation is in check. The Association of Bay Area Governments (ABAG) just reported that Santa Clara Country is expected to gain approximately 95,000 jobs in 2006-2007 (SJ Merc article on Tuesday, 08/29). The same report predicted a shortage of housing units in the whole Bay Area - not just Santa Clara County - that will reach 150,000 units by 2010. Another SJ Merc article on Wed., 8/30 reported that San Jose is #2 in the country for household income.
A thorough analysis leads me to believe that the sky isn't falling nor the bubble bursting.
