Area Real Estate Prices Continue Upward Trend

San Fernando Valley home prices jumped 4.3% from April to May, continuing a trend that has seen values rise 16% in the last five months, a trade group said Monday.

The median price of a single-family Valley home sold in May was $220,000. That’s up 17% from year-ago figures, fast approaching the pre-recession high of $245,000 in 1989, said the Southland Regional Assn. of Realtors.

The Valley real estate market has been steadily gaining momentum from when it bottomed out four years ago. Prices should continue to rise during the summer, which means that if you’re thinking of buying a house, don’t wait, said Jim Link, executive vice president of the Realtors association.

“First-time buyers should get in as fast as possible,” Link said. “With the prices going up, they’re going to get squeezed out if they don’t act soon.”

Several factors help explain the rise in home prices. A strong economy in Southern California (and nationally), low interest rates and a skyrocketing stock market enable more and more people to buy homes.

But the rise in prices--along with tightening inventories--may have contributed to a decline in the number of sales. The number of houses sold last month in the Valley decreased 12%, from 1,283 in May 1998 to 1,131 in May 1999, the real estate group said.

“The shrinking inventory is what held us back from more sales,” Link said. “The demand is there.”

Interest rates are also rising, another reason to plunk down money for a house now, said Chris Tolle, a Realtor associate with Lamb Realtors in Northridge.

“We’ve already seen a half-point mortgage increase this spring,” Tolle said. “And with so many people taking their profits out of the stock market and putting them into real estate, the housing market is going to get more volatile.”

The state of the Valley condo market mirrors the one for houses: fewer units and higher prices. In May, 316 condos were sold, down 5% from last year, and median prices rose 16% from $110,000 in May 1998 to $127,500 this year.

Abodes are getting more pricey in the Santa Clarita Valley, too. The median price of single-family homes shot up from $194,000 in May 1998 to $227,500 last month; condo prices also climbed by 12%.

At this rate, are prices climbing so quickly that home buyers will soon be scared off, cooling down the market?

Not likely, says Beth Sommer, president of the Realtor association. “There’s so much demand for homes right now that we have awhile to go before that happens,” Sommer said.