DAYS OF EQUITY WINDFALLS MAY HAVE WANED.

Byline: GREGORY J. WILCOX

Conductor, swing the lantern -- the equity gravy train left the station at last.

Anyone now boarding the Residential Real Estate Express in the San Fernando Valley might be in for a ride with little elevation change price-wise.

Reports last week from the Southland Regional Association of Realtors and DataQuick information systems showed that the annual rate of appreciation of previously owned homes sank into single digits here and across Los Angeles County for the first time since 2001.

It's an eventuality anticipated for more than a year. So is this a one- month aberration or the start of a trend.

The thing about market trends, though, is that it takes more than a month to spot them. History has to provide perspective.

Sales of single-family homes offer a good example.

Consider this: In November 1989, sales fell under the 1,000 mark after spending most of the previous four years above it.

And they pretty much stayed there -- except for three consecutive months in 1994 -- until May of 1997.

Sales then remained about 1,000 units for the vast majority of time until last October.

They have been under the 1,000 mark since then.

In May of 1990 we could look back and say the market tanking started in November 1989.

That's because prices followed suit. That month the median housing price dropped an annual 8.2 percent to $225,000. The prior year prices increased 21.1 percent and in 1988 they soared 32.1 percent from 1987.

Prices falling plus sales falling adds up to a bubble bursting. That happened in the early 1990s.

Can't quite make that same call at this time, though.

Even though sales have been under their year-ago levels since last October, the median price has been above it.

It's been bouncing up and down from month to month and that has been happening for quite some time.

Price increases each year from 1997 to 2005 have ranged from a low of 3.4 percent ('97) to a high of 26.3 percent in 2004.

But it's quite clear that the current sales decline is putting downward pressure on prices.

``I think we're seeing the cooling trend having an affect on the median price. I think you're going to continue to see it go up but at a single digit pace,'' said Jim Link, executive vice president of the Realtors association.

In the past, price declines took root from economic troubles, like recession and job loss.

The steep recession of the early 1990s drove a huge job loss and that in turn depressed prices from 1990 to 1996.

The market blew through the recession at the beginning of this decade and a forecast from the San Fernando Valley Economic Research Center at California State University, Northridge, released on Friday promises good sustainable job growth through 2008.

This suggests a moderation, and not a collapse, of prices.

CSUN economics professor Daniel Blake, who wrote the forecast, sees some change coming in the Valley's residential real estate market.

He, too, believes that there will be a single-digit price increase this year and that higher mortgage rates will dampen demand.

``Valley home buyers should see relief this year from the recent home price spiral but Valley renters are beginning to feel the upward pressure on rents as displaced home buyers move into their market,'' Blake said.

As Blake was presenting his forecast on Friday he put a slide about the housing market. At the top in the corner was -- ``BUBBLE?''

That question didn't get answered on Friday.

And it might be a while yet before one is available.

One thing looks certain, though. If you buy now, the future probably won't bring the equity windfall of years past.

greg.wilcox(at)dailynews.com

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