Realtors sold a total of 3,746 single-family homes and condominiums during 2006 in the Santa Clarita Valley, contributing more than $2.1 billion to the local economy, the Southland Regional Association of Realtors reported on Thursday, Jan. 25.

Of that number, 2,531 sales were single-family homes. That was 32.1 percent below the 2005 tally of 3,726 sales. Condominium sales during 2006 also declined off record activity levels, falling 29.6 percent to 1,246 transactions compared to the 1,771 condos sold in 2005.

Even as sales slowed, however, the annual median price of single-family homes that changed owners last year hit a record high of $603,492, surpassing the $600,000 annual mark for the first time on record.

Despite declining activity, the median rose 6.9 percent over the prior year. The median has increased sometimes by 20 percent, 25 percent or higher every year since the Association started keeping statistics in 1998.

The annual condominium median price also hit a record high during 2006. The $380,583 annual median was up 6.8 percent over 2005. Like single-family homes, the condominium annual median has rising every year since 1998, posting annual gains of 25 percent or higher.

"A 6.9 percent return on an investment is pretty good in my book," said Larry Gasinski, the 2007 president of the Association’s Santa Clarita Valley Division. "Sales are slowing down not for lack of demand, but because prices increased too high too fast.

"More buyers are coming out now as they realize that the feeding frenzy is over, the selection is wider, interest rates are still near historical lows and that sellers are setting realistic prices and are open to negotiation,"

Gasinski said. "Who knows where interest rates will be in the Spring? Who knows how many other buyers will get off the fence and jump into the market in three or four months?"

Indeed, the 255 pending escrows – a measure of future resale activity – at the end of December represented a 2.4 percent increase from a year ago. It was the first December-to-December increase since 2003, suggesting that demand persists, that consumers remain confident and that the market is still strong and vibrant.

While incentives offered by new home builders in Santa Clarita have slowed the adjustment in the local resale home market, Jim Link, the Association’s executive vice president, believes the market readjustment is nearly over and that activity will increase in coming weeks and months.

"Only a few sellers still cling to the false expectation of a 25 percent return and only a few buyers incorrectly think they can get steep discounts," Link said. "Everyone else understands that while the sellers’ market is over, what we have today is a balanced market that, even with a larger inventory, in no way suddenly puts buyers in control."

There was a total of 1,919 active listings in the Santa Clarita Valley at the end of December, up 81.2 percent from a year ago, but off 12.1 percent from the November tally.

At the current pace of sales, that represents a 6.9-month inventory, only slightly above the 5- to 6-month range regarded as a balanced market, but not large enough to sway negotiating leverage in favor of buyers. At the peak of the sellers’ market the inventory often was near zero or less than a 1-month supply.

December ended with 203 single-family sales and 76 condominium closed escrows, off 8.1 percent and 9.5 percent respectively. The median price for both categories of housing declined modestly compared to December 2005, off 1.7 percent for single-family homes to $590,000 and down 7.5 percent to $360,000 for condominiums.

"Properly priced homes are selling," Gasinski said. "Frankly, getting back to a normal market is a wonderful thing for everyone."