HOMEOWNER WOES REAL BUT NOT WIDESPREAD.

Byline: GREGORY J. WILCOX

'Normal' is not a term that can be applied to foreclosures in the San Fernando Valley even though the number of people who lost homes in the first quarter is 16 times higher than two years ago.

That's the conclusion of Daniel Blake, director of the San Fernando Valley Economic Research Center at California State University, Northridge.

He made this point last week in releasing the university's Economic Forecast for the San Fernando Valley.

In fact, Blake agrees that there hasn't been anything normal about this boom-bust-boom-bust market that dates back to the middle of the 1980s.

In the mid-1980s, sales and prices built to record levels. Then the market tanked, with both sales and prices falling for a prolonged period. Then in the latter part of the 1990s, both sales and prices took off again, with prices reaching record highs.

Then at the end of 2005, sales fell off a cliff and prices sort of stayed put.

So it figures that a down market will bring an uptick in foreclosures.

What's not clear is how bad the problem will get.

"Are the current foreclosure rates normal? Below normal? Above normal?" Blake wondered in his outlook. "In truth, we don't quite know what normal foreclosure rates for the Valley are."

A bar chart of foreclosures, houses that actually got taken away from people, shows very few from 1988 to 1991. Then they start a rapid ascent that peaks in the middle of 1995, falling back and then hitting another peak in 1996.

By 2004 they are down in the 1988 range again.

That increasing rate came at a time of massive economic restructuring first and then the Northridge Earthquake.

Nothing normal about the way that chart looks or those two events.

Current numbers do show a troubling trend. During the first quarter, 1,728 Valley homeowners from Glendale to Calabasas received notices that their mortgage payments were late. DataQuick Information Systems began tracking this statistic, notices of default, in 1998. At that time, just more than 2,000 homeowners received NODs.

So while this year's first quarter number is close to that one, there is no comparable one for the mid-1990s. And that was a time when foreclosure activity resulted in a real estate fire sale.

Blake's analysis also shows that actual foreclosures bottom out in the 2005 first quarter, with 25 across the entire Valley.

In the latter half of the year that total doubled to 50.

In the first quarter of this year, 408 families lost their homes in a market that is entrenched in a deep sales slump. But in the down market of 1996, more than 1,800 owners lost homes in the year's third quarter.

Both notices of default and actual foreclosures will likely increase in the coming months. But it most likely won't be like the mid-1990s again.

Blake is not the only one suggesting this, either.

Last week Federal Reserve Chairman Ben Bernanke sounded a similar theme, saying the central bank is considering tougher rules to crack down on abusive practices by mortgage companies.

He also said that the overall economy should be spared significant harm from subprime market problems.

He told Congress that it's likely there would be further increases in mortgage delinquencies and foreclosures this year, and in 2008 it would not be enough to derail the overall economy.

He said he believed the financial system would be able to absorb the losses from the subprime mortgage loans that go bad without major difficulties.

"We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system," Bernanke said, according to the Associated Press.

greg.wilcox(at)dailynews.com

[phone]