EYES ON COMING REPORTS ON HOME SALES.

Byline: GREGORY J. WILCOX

There's a ``quiet if'' riding shotgun with the ``quiet boom'' that's forecast to run through Southern California's economy this year and next.

It has to do with real estate -- residential and commercial, noted the ``Mid-Year Update: 2006-2007 Economic Forecast & Industry Outlook'' from the Los Angeles County Economic Development Corp.

Two reports on June's residential markets -- the San Fernando Valley and Southern California -- come out this week and they'll likely point to a growing economic soft spot.

Last month, the median price of a previously owned house in the Valley increased a scant 3.7 percent, to $600,000, from a year ago, according to preliminary figures from the Van Nuys-based Southland Regional Association of Realtors. And that is equal to the median price -- then a record -- for this month last year.

June's annual increase will be the smallest in more than 62 months after May's 4.3 percent gain.

Sales are in a funk.

And the way prices are behaving these days, last summer's buyers can't treat their homes like an ATM anymore.

Indeed, the LAEDC forecast compiled by its chief economist, Jack Kyser, said there are three risks to the state and local economies: Two are on the housing front; the other is a terrorist attack.

There's the risk that the slowdown in the housing sector could be sharper than expected.

And the housing boom and strong economy resulted in increased revenue flows (the house as an ATM) for most government agencies. And some could get caught off-guard by an unanticipated slowdown in this revenue stream, Kyser reasoned.

``Obviously, the housing market in California and Southern California, both new and resale, is a concern,'' he wrote.

``Is there leveling off or is there a bubble?''

He maintains that the real bubble now is not necessarily price-related but linked to a rush to build expensive live/work lofts or high-rise condos in former industrial areas that have few of the expected amenities.

``The real question is how deep is either one of these markets,'' Kyser asks.

The answer to that, which will be revealed in the coming months, will be important not only to the construction industry but also government agencies.

And then there is the issue of land, a scarce commodity in urban areas.

``Land -- its cost and use -- will be an issue throughout Los Angeles County over the next 18 months,'' Kyser said.

While the commercial sector could pick up some slack from a fall-off in residential construction, the big worry is vanishing industrial land, an issue the LAEDC has raised on numerous occasions.

As industrial land disappears, so does the jobs that are so critical to a healthy middle class.

Bill Allen, the LAEDC's president and chief executive officer, said preserving industrial land will be a key component of the region's future economic health.

He recalls that at one time, about 8 percent of the land in the Los Angeles area was zoned for industrial use before the erosion set in.

``Half of that (amount) has been converted to other uses and we have to preserve what little industrial land is left because that's where many of the highest-paying jobs take place,'' he said.