VALLEY HOME PRICES SOAR; SALES CLOSE IN ON 1989 HIGH.

Byline: Gregory J. Wilcox Staff Writer

VAN NUYS - The San Fernando Valley's residential real estate market began the summer buying season at a torrid pace during May as the median price of a single-family home soared 18.9 percent to a record $367,500 and sales hit their second-highest level for the month since 1989, says a report to be released today.

May was the third consecutive month of a record median price for a previously owned home.

And thanks to historically low interest rates, consumers bought 1,284 homes last month, just 1.4 percent under the year-ago number, said the Van Nuys-based Southland Regional Association of Realtors.

``The market just continues to be strong,'' said association President Tom Carnahan. ``I fully expect this seller's market to continue for many months to come.''

Sales remain robust because low interest rates are offsetting the price increase. For example, last week the California Association of Realtors reported that its housing affordability index for the state was 29 percent in April, unchanged from a year ago even though the median price increased 14.8 percent. The index measures the percentage of households in the state that can afford the median price.

Even though prices are climbing, sales remain robust because of tight supply and strong demand.

May ended with a 1.45-month supply of housing product as 2,457 properties were listed for sale, according to the association's count, an annual decline of 17 percent.

For a market the size of the Valley to remain in balance, an inventory of 8,000 properties is considered necessary.

If more stock was available, sales would be stronger, officials said.

``As long as interest rates stay at record lows, the real estate market will continue to be really hot,'' said Jim Link, the association's executive vice president.

The smaller condominium market featured a record median price, too, soaring an annual 25 percent to $230,000. It eclipsed the prior record of $225,000 set in April.

Sales fell an annual 16.9 percent to 413 units, reflecting more of a lack of supply than demand.

``I think that the supply side of the equation has a lot to do with that,'' said Nima Nattagh, an analyst at FNC, which supplies market information to the mortgage industry. ``And that's been exacerbated by the fact mortgage rates are still on a downward trend.''

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com

CAPTION(S):

chart

Chart:

VALLEY HOME PRICES

SOURCE: Southland Regional Association of Realtors

Warren Huskey/Staff Artist