STATE HOME SALES PLUNGE 24 PERCENT JANUARY DECLINE BIGGEST SINCE '95, BUT PRICES STILL GOING UP.

Byline: Gregory J. Wilcox Staff Writer

Home sales tumbled an annual 24 percent across California during January, the biggest drop in more than a decade and further evidence that the latest boom market is past its peak, a trade group said Tuesday.

Price gains remained strong in most areas, though, and analysts do not believe the sales decline will trigger a price collapse that followed the sales bust at the end of the late 1980s buying binge.

``Definitely the market has come back down to earth. There's no bubble but ... a more sober residential real estate market,'' said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.

January's sales plunge was the biggest since a 26.7 percent decline in April 1995, said Mark Giberson, a spokesman for the California Association of Realtors.

Sales fell from their year-ago levels in 19 of 20 markets the association tracks, including a 23.5 percent decline in Los Angeles County, a 16.3 percent drop in Ventura County, a 19.1 percent slide in the Inland Empire and a 24.2 percent drop in Orange County.

The biggest decline, 39.3 percent, came in Monterey County.

By comparison, sales across the U.S. fell an annual 5.2 percent in January, according to the National Association of Realtors.

The state association's report means that there would be 500,470 sales of previously owned single-family houses in California this year if the market proceeds at January's pace for the next 11 months. That would be the lowest level since 493,800 annualized sales in September 2004, the association said.

On monthly basis the decline statewide was a more modest 5.9 percent compared with December's figures. But the monthly decrease was much sharper in Los Angeles (19.3 percent), Ventura (27 percent) and the Inland Empire (35.5 percent).

Nationally, sales fell 2.8 percent from December.

Only one market - the High Desert, which includes the Antelope Valley and is the state's most affordable - posted an increase of 4.7 percent annually.

But overall statewide, January brought the fourth consecutive month of annual declines.

Leslie Appleton-Young, the association's vice president and chief economist, noted that the January 2005 sales pace was a record and the market was expected to cool this year. It will take until at least this spring to get a better read on how dramatic the rebalancing will be, though.

Her forecast calls for a 2 percent drop in 2006 versus a year ago.

``I don't think we are going to see a bubble bursting but it's definitely a market in transition to lower appreciation and a somewhat slower sales pace,'' she said.

But she expects this year's market to still be a strong market historically.

There are also different dynamics in play now versus the beginning of the 1990s.

Southern California's economy fell off a cliff back then, with Los Angeles and Orange counties losing 700,000 jobs over the next few years. Many homeowners followed their jobs out of state, flooding the market with properties and driving down prices. Foreclosures spiked as homeowners who owed more than their property was worth let the titles revert back to the lenders.

Appleton-Young does not see that happening now.

``The economy is improving. I think that's the big difference. In the 80s, we were on the verge of a tailspin into a major recession,'' she said.

And this market turn comes at a time when mortgage rates, while moving up, are still low and lenders have flooded the market with a variety of loan products.

However, the buyers' retreat is in response to rising interest rates and prices that continue to move above the year-ago level.

And price gains are still strong despite predictions that they would narrow from a year ago by now.

During January, the median price of a previously owned home in California increased an annual 13.8 percent to $551,300, the association said.

In Los Angeles, the median jumped an annual 17.9 percent to $560,740; it gained just 6.9 percent in Ventura to $682,250; increased 10.2 percent in Orange County to $699,060; and by 15.5 percent in the Inland Empire to $391,250.

Appleton-Young said that inventory statewide is now a six-month supply - considered average - and that this will translate into slower appreciation rates and more leverage for buyers.

While prices are not expected to fall under year-ago levels, potential buyers could finally be getting a break.

Kyser believes the market peaked near the second half of last year and the median price, the point at which half the homes cost more and half less, has moved sideways since then.

By summer, when the market traditionally heats up, single digit price gains are expected, Kyser said.

David Lereah, chief economist at the national association, said that pending sales started trending down after hitting a record last August. ``I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity,'' he said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com