HOME-BUYING MARKET SLOWING, BUT STILL HEALTHY.

Byline: GREGORY J. WILCOX/ Real Estate

Hand-wringing over a real estate bubble will likely intensify after last year's robust market shattered the price record for single-family homes and condominiums in the San Fernando and neighboring valleys.

It probably won't evolve into a case of perception becoming reality, though.

Michael Carney, director of the Real Estate Research Council at California State Polytechnic University, Pomona, offered one of the most insightful assessments of the situation last summer.

``I don't believe you can tell you're in a bubble until it bursts,'' he told the Daily News.

And the pop can be devastating and sudden, as characterized by what happened to the Valley's market in 1990.

In 1988, sales of single-family homes hit a record 15,263 units and the median price, the point at which half the homes sold for more and half for less, climbed 21.1 percent to $195,708, also a record.

The next year, sales fell 16.4 percent, but the total was still a respectable 12,753 units. Price appreciation continued, though, with the median again soaring 21.1 percent to a record $236,958.

Then the bubble burst.

In 1990, sales plunged 31.6 percent and prices slipped 2.4 percent to $231,358.

That's not a huge decrease. But it was the first of what would be seven consecutive years of decline, with the average annual median price bottoming out at $160,441 in 1996.

The record monthly median price during the prior boom era was $245,000, reached twice in 1989.

Last month, another monthly price record - $332,000 - was set, according to a report released Thursday by the Southland Regional Association of Realtors.

That's $87,000 more than the 1989 record - and $67,000 worth of appreciation in the past 12 months.

Sales are strong, too.

So is another bubble about to form?

Not likely, since different economic forces are in play now.

At the end of the 1980s, the Cold War ended and the defense sector, a huge player in the Southern California economy, imploded. Interest rates were higher then and lots of speculators were in the market, flipping properties and helping drive the price increase.

The current economy is tepid at best, but it's not under the kind of stress present during the early 1990s.

It is also more diverse than 13 years ago and, since the Bush administration continues to beat the war drums, defense sector employment in the region is expected to pick up soon.

Interest rates remain near historic lows and not much upward movement is expected this year. Demand for housing remains strong and supplies tight.

The stock market is still hibernating and that makes real estate look like an attractive investment.

The only worry in some quarters is that people who refinanced their homes, thus using up equity, may be forced to let their home slip into foreclosure if they suffer an economic calamity like a job loss.

Jim Link, executive vice president of the Southland Regional Association of Realtors, believes sales and prices will remain strong this year, but not as good as last.

That means prices may appreciate 10 percent to 12 percent on an annual basis with sales counts softening but still remaining strong.

It doesn't pencil out to the market bubbling up.

Nima Nattagh, an analyst at FNC, which supplies real estate market information to the mortgage industry, doesn't subscribe to the bubble theory.

``If we are to see a softness, it will be a gradual one. And we may have homes at the top end on the market longer, so people will have to adjust their asking prices,'' he said.