HOUSING FUTURE UNCERTAIN, BUT CERTAINLY NOT GOOD.

Byline: GREGORY J. WILCOX

There is a disquieting trend upon us and things are going to get really bad at some point or buyers and sellers could be stuck in neutral for a prolonged period.

This much is a certainty, though: The resale housing market is in a funk for the first time in years.

We can now mark the sales turn at the end of the third quarter, the last time most markets recorded totals above a year ago.

They've been under that ever since. And that signals a trend.

The mystery now is what becomes of prices.

Most market watchers anticipate a period of flatness but a case can be made that that, too, has already arrived.

Consider the following price points in May:

In May, the median price of a previously owned home in the San Fernando Valley was $600,000. That's exactly where it was last July.

And that's the first time the current year and past year median price have been this close since September 1996, when the $158,000 median matched that of the prior 12 months.

May's median price in Los Angeles County was $568,550. That's not too far from the $564,340 median of last August.

And the statewide median in May of $564,430 is below last August's record of $568,890.

You get the picture.

Price gains are not nearly as robust as a year ago.

That's probably a reflection of the mix of homes being sold -- fewer at the high end and more at the lower price points.

So what becomes of that great equity buildup during the first half of the decade?

That depends on how it was embraced.

John Karevoll, an analyst at DataQuick Information Systems, which tracks the real estate market's movement, notes that all things considered, this year will probably end up as pretty good.

Things that are falling, like sales, are coming down from extremely high levels. And things that are rising, like foreclosure activity, are coming off really low levels.

And if you've got a good chunk of equity in your house, it probably won't go ``poof.''

``The question now is just how much of that increase over the past five years are we going to keep. Even the most negative forecasts say we get to keep 95 percent of that,'' Karevoll said. ``My view is the vast majority of gains we've had are here to stay.''

Of course, there is a contrary view.

Riverside investor Bruce Norris, founder of the Norris Group, sees dark days ahead.

He just released ``California Crash,'' a report full of 407 looseleaf pages of heavy stuff. (It weighs 5 pounds, 8 ounces, according to our mailroom scale, and cost $997, according to his Web site.)

Norris predicts that California will see a 1,500 percent in foreclosure activity by 2010. (Newspaper articles and his press kit credit him with predicting the market boom that started in 1997.)

He notes that $1.5 trillion in adjustable loans will do just that -- upward -- between now and next year.

``California has a much higher proportion of adjustables,'' he said.

And buyers who refinanced over and over to take advantage of what once were sinking interest rates could find themselves in a bind.

So could late-comers to the market who bought with interest-only loans and are in for a surprise if interest rates keep rising.

And Norris maintains it won't take a lot of stretched mortgage holders to start some bad stuff rolling downhill.

``You don't have to have more than 2 percent of owners to create a tremendous problem,'' he said, ``and send foreclosures rising.''

greg.wilcox(at)dailynews.com

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