HOMES KEPT SELLING WHILE PRICES SOARED.

Byline: Gregory J. Wilcox Staff Writer

Home sales in the San Fernando Valley hit their fourth-highest total since 1988 last year even though prices kept climbing - by 20.1 percent in 12 months - to a median of $569,208 for a previously owned home, a trade association said Tuesday.

Last year consumers bought 17,566 houses and condominiums, a 3.4 percent dip from 2005 but the ninth-highest total since record keeping began in 1970, according to the Van Nuys-based Southland Regional Association of Realtors.

Those sales generated more than $11.97 billion for the Valley's economy, not including the additional millions that buyers and sellers spent on related products and services, the association noted.

``We anticipated that sales were going to be strong in 2005 and believe heavy resale activity will continue through 2006,'' said Jim Link, association vice president.

Last year marked the third consecutive increase of 20 percent or more in prices. Prices have increased on an annual basis for nine years in a row.

During the past 18 years, there have only been seven price declines - all during the massive economic restructuring of the 1990s. During that period the median price dipped to a low of $155,000 in November 1995 and again in February 1997.

Link expects a more normal price increase - one or two percentage points higher than the rate of inflation - this year.

``That being said, we've been wrong the last couple of years, so we'll see.''

Last year 12,786 previously owned single-family homes changed hands, an annual decline of 3.7 percent and in line with expectations. It was the eighth consecutive year of 12,000 or more sales.

The year ended on a mixed note, with sales of 892 single-family homes in December, down an annual 22.4 percent. But the median price rose 18 percent on an annual basis to $590,000. That's $10,000 below November's record.

And while sales are expected to continue to soften and price increases to moderate, strong demand should continue to edge those prices toward another record level and to further erode affordability.

``I think we're at a point where the single-family residence is almost out of reach of the first-time buyer or moderate-income buyer. There are a number of good loan programs out there that are frankly helping fuel the market,'' Link said.

But interest rates are moving up, and there are indications that lenders will respond by tightening credit standards. For example, the Web site HomeSmartReports.com released a study Monday that found that lenders have increased their scrutiny of loans after the default risk soared 28.6 percent across California during the second half of last year. But Southern California had one of the lowest risk levels in the state.

The association president, Steve White, said a slight sales slowdown would be welcome.

``After years of a one-sided argument, buyers need a little breathing room, and sellers need to bring price expectations in line with current market realities,'' he said.

With home prices soaring, many buyers turned to less expensive condominiums last year. This market accounted for 4,780 sales, down 2.5 percent from 2004 but the sixth consecutive year above the 4,000 mark.

The median price, the point at which half the units cost more and half less, jumped 22.1 percent from the prior year to $364,458, also a record.

In December, there were 340 condo sales, down 23.8 percent on an annual basis, but the median price soared 22.6 percent, to $390,000. That's close to what the median price was for a single-family house in July 2003.

Last year also featured record low inventories, but supply is building. At year's end there were 3,588 properties for sale, up an annual 27.5 percent, the association said.

But that's just a 2.9-month supply at the current sales pace and less than half what's considered necessary for a balanced market that favors neither sellers nor buyers.

Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., agrees the market is slowing and also expects lenders to scale back some of the more aggressive loan products, such as those with extremely low introductory rates.

Kyser said one weak spot for the Valley could be that it's heavily invested in the entertainment sector, which is dealing with a disappointing 2005 box office, and is still beset with runaway-production issues and union militancy.

``The motion picture industry is probably still going to be struggling in 2006. It could have somewhat of an impact on your market so that's one thing I would caution the Valley people about,'' Kyser said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com