In the San Francisco metro area, inventory is up nearly 25-percent, and home values are up slightly -- about two-percent from a year ago.
In the San Jose metro area, inventory is up nearly 45-percent, and home values have actually dropped. It's only point-two percent, but that's still a drop.
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What a difference a year makes. There are more homes for sale. That means buyers may not be competing against others and putting in offers above the asking price.
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"The first-time home buyers that are operating can't keep out-bidding each other," said Skylar Olsen of Zillow, which released the home sales data. "That kind of home value appreciation was outsized. It was unsustainable. This is the market correcting itself."
Gustavo Gonzalez is the owner of Valley View Properties. He sees the San Jose housing market starting to normalize. "I don't know if we'll open a floodgate," he said. "I think what we'll do is we'll the buyers that are out there looking, maybe have a better opportunity of finding a house."
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There is also good news when it comes to mortgage rates. Compared to a year ago, a 30-year fixed loan is running about one percent lower.
What does that mean? Let's use a house on the market for about $1.2 million -- the median price for San Jose. The one percent difference in mortgage rates -- from 5 percent last year to 4 percent now -- translates into a $600 lower monthly payment with a 20 percent down payment.
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To put it another way, a lower interest rate means you might qualify to buy a more expensive home. Still, Jim Hamilton of Alain Pinel Realtors in Los Gatos says buyers need to be careful.
"When you're qualifying for a loan and you're getting to that max of what you can qualify for when that interest rate drops, it affords you more home," said Hamilton. "But one thing caveat is, I'd say, be careful of that too. Depending on what loan you're getting, make sure that you can afford it."
The Zillow analysis is an indication of an adjustment, but how long will it last? No one appears willing to forecast that.
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