2005 was the fourth best year since 1988 for the residential real estate market of Northern Los Angeles County as Realtors negotiated 17,566 single-family home and condominium sales, the Southland Regional Association of Realtors reported on Jan. 17, 2006.

While staying strong due to unrelenting demand and favorable interest rates, the San Fernando Valley's market slowed slightly compared to a year ago as the median price of homes rose to a record high and the inventory of homes listed for sale sank to record lows.

The 2005 sales total was down 3.4 percent from 2004 and well below the record high of 19,964 set in 1979 and the second best tally of 19,773 sales recorded in 1988. Overall, 2005 was the ninth best year on record since the association started keeping statistics in 1970.

The home sales negotiated by Realtors for buyers and sellers generated more than $11.97 billion for the economy of the San Fernando Valley, not including the additional millions buyers and sellers spend on related products and services, ranging from new furniture, washers, and dryers to construction, painting and yard services.

"2005 was yet another banner year in the ongoing sellers' market that had its beginnings in the mid-1990s," said Steve White, the Association's 2006 president. "Realtors expect 2006 to be just as strong, although even a slight slowdown in sales would be welcome news. 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."

White and Jim Link, the Association's executive vice president, believe resale prices will continue rising, but at a slower pace, just ahead of the rate of inflation or somewhere between 5 percent and 10 percent – a far cry from the 20 percent and higher increases experienced over the last several years.

"We anticipated that sales were going to be strong in 2005 and believe heavy resale activity will continue through 2006," Link said. "Frankly, we were surprised by last year's 20 percent increases in the resale prices, but we fully expect a more normal rate of appreciation to return in 2006 – which would be one or two percentage points higher than inflation.

"Reigning price increases in would be very healthy for local housing market," Link said. "The market has been tilted to heavily in favor of sellers for to long. To have prices continue to outpace incomes pushes too many buyers out of the market, which is bad for buyers and sellers."

The 2005 annual median resale price of the 12,786 homes that changed owners last year was a record high $569,208, up 20.1 percent over the 2004 annual median of $473,750.

It was the third straight year that the annual median jumped by more than 20 percent and the 9th consecutive year of increases in the annual price. The Valley's annual median resale price fell in only seven of the last 18 years – during the national recession from 1990 to 1996.

Single-family home sales exceeded 12,000 for the eighth consecutive year, although the 12,786 homes sold last year fell 3.7 percent from 2004.

2005 home sale activity also included the sale of 4,780 condominiums,-- down 2.5 percent from the 2004 tally. It was the sixth consecutive year that condo sales exceeded 4,500, with 2002 being the record high of 5,041 sales.

As prices have risen and inventory tightened, annual condo sales have declined in each of the last three years, but hovered near the record high.

The condominium annual median price rose in 2005 to a high of $364,458, up 22.1 percent over the 2004 median of $298,500. It is the first time on record that the condo median has exceeded $300,00 and the fourth consecutive year of annual increases in excess of 22 percent.

At the end of December there were 3,588 active listings throughout the Valley, an improvement of 27.5 percent from a year ago and up dramatically from the 1,498 active listings of March 2004. However, the inventory still represents a mere 2.9-month supply at the current pace of sales, not the 5- to 6 month inventory needed to maintain balance in the market.