Home Prices Keep Going Up As Sales Begin to Slow Down

By Frank Michael Russell, San Jose Mercury News, Calif.

Jun. 25–Here’s a quick rundown of news you may have missed last week, culled from reports by our staff and wire services.

Monday

Internet phone provider Vonage Communications (you may have seen its wacky TV ads) has struggled since its initial public offering, and its shares have lost nearly half their value. In even more bad news for the company, telephone giant Verizon Communications filed a lawsuit contending Vonage violated at least seven patents that cover technology for sending phone calls over the Internet.

Tuesday

Speaking of the Internet, is there any middle ground in the “network neutrality” debate, which pits phone and cable companies such as Verizon and Comcast against online giants such as eBay and Yahoo? The Center for Democracy and Technology offered this compromise:

The Internet as it exists now would remain “neutral,” which means high-speed providers wouldn’t be able to charge for priority access. However, they would be free to build private lanes to speed along data such as video programming.

Wednesday

If you’re confused by the real estate market in the Santa Clara Valley, we don’t blame you. According to the latest report from DataQuick Information Systems, resales of single-family homes in the valley were way down in May (25.3 percent lower than a year ago), while prices were way up (9.4 percent over May 2005).

Santa Clara County, in fact, had the strongest price appreciation in the Bay Area. In the nine-county Bay Area as a whole, price appreciation was at 6.5 percent, and in San Francisco, our lovely neighbor to the north, the median price was actually 1.8 percent lower than a year ago.

Here in Silicon Valley, the median house price in May was $755,000, up from $725,000 in April and $690,000 a year ago. The median condominium price was an even half-million dollars, up from $460,000 in May 2005.

Thursday

Profit at Redwood City software behemoth Oracle soared 27 percent in its fiscal fourth quarter compared with a year ago, as the company benefited from a $20 billion acquisition spree that included takeovers of PeopleSoft and Siebel Systems.

“We are growing faster than the overall database market because we are winning share from our competitors,” never-modest Chief Executive Larry Ellison said in a statement announcing the results.

Intel Chief Executive Paul Otellini, meanwhile, was near Dublin (the one in Ireland, not the one in the East Bay) to open the Santa Clara computer microprocessor giant’s newest chip manufacturing plant. The new fab uses 65-nanometer technology, which we’re told is very small and allows Intel to pack more transistors onto a single chip. Intel also benefits from Ireland’s very low tax rates.

Friday

Intel’s Sunnyvale rival, Advanced Micro Devices, meanwhile, chose a site in upstate New York for a new $3.2 billion plant, lured by about $1.2 billion in subsidies.

New York Gov. George Pataki joined with AMD Chief Executive Hector Ruiz to announce plans for the new fab. “The Hudson Valley is going to be America’s next Silicon Valley,” Pataki said. On a hot, smoggy “Spare the Air” day back in America’s first Silicon Valley, we’re going to assume he meant that in a good way.

Frank Russell writes the 60-Second Business Break, posted weekday afternoons at about 2 at mercurynews.com. Contact him at frussell@mercurynews.com or (408) 920-5876.

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Copyright (c) 2006, San Jose Mercury News, Calif.

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