The city of Palo Alto, with an average price of $1,263,250, tops the list. A comparable home in Yankton, S.D., costs $101,062, making it the most affordable market in the nation. Overall the survey found the average sales price of the study's subject home nationwide is $291,097.

Besides Palo Alto, San Francisco and San Mateo were among the top 10 most expensive markets in the nation. Only mid-size and large cities with a significant business district and corporate presence were included in the survey, which focused on regions where business people tend to relocate. Upscale Silicon Valley suburbs like Atherton, Menlo Park and Saratoga were not included in the ranking.

For those who own homes already, rising prices are good for building equity. But, for those who are trying to get into the housing market, the high prices become a barrier to entry.

The latest statistics just released for the month of July show the median price of existing homes in California rose 21 percent and sales increased 7.5 percent compared to the same period a year ago, according to the California Association of Realtors.

"We've been anticipating the frenetic pace of home sales to return to more typical sales levels, especially compared to earlier this year when sales were at record-breaking levels several months in a row," said California Association of Realtors President Robert Bailey. "Compared to June, sales increased 1.3 percent in July.

"The median price of a home has increased by 20 percent or more in five of the previous six months," Bailey said. "In fact, most regions of the state recorded double-digit increases in median prices compared to the same period a year ago. It's a reflection of continued constraints on the supply of homes for sale relative to demand."

Closed escrow sales of existing, single-family detached homes in California totaled 540,800 in July at a seasonally adjusted annualized rate, according to information collected by the association from more than 90 local Realtor associations statewide. Statewide home resale activity increased 7.5 percent from the 503,030 sales pace recorded in July 2001.

"Extremely favorable interest rates, at their lowest level in four decades, continue to have a positive impact on the residential real estate market. California consumers also are benefiting from a wider array of loan products than have historically been available," said the association's vice president and chief economist, Leslie Appleton-Young. "Affordability, while still low, is well above the levels of the late 1980s during the last housing cycle, and remains a concern for many households in the state."

The statewide sales figure represents what the total number of homes sold during 2002 would be if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during July 2002 was $323,700, a 21 percent increase from the $267,520 median for July 2001.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.