I read in the paper last weekend that median home prices in Santa Clara County were down in April 2006 compared to April 2005. This is significant because this is the first year over year decrease in some time.

At first glance one might think that the much discussed bubble is finally showing signs of bursting, but be careful not to jump to conclusions. The article went on to explain that starter homes were still selling fast and with multiple offers, but more expensive and luxury home activity has slowed significantly.

It is important to understand that the median home price is simply the midway price between the highest and the lowest prices. If the median price decreases, it does not necessarily mean that the price of similar homes have decreased. If the number of expensive homes sold has decreased but the  number of less expensive homes remains the same, that alone will lower the median price.

First time buyers who are looking for a bargain may be sorely disappointed to find out that the home they could have bought for $750,000 this time last year is now selling for $850,000 this year, even though the median price has declined.

I continue to counsel my buyers to buy the home they love and plan to stay there for at least 3-5 years. Even if there is a temporary decline int he market, it is sure to rebound and become a good investment in the long run. And in the meantime, they will enjoy having a home of their own with all of the advantages that go along with it.

To search for homes for sale in the mid peninsula area, visit my website at www.Lmercer.com.