NORMAL A RELATIVE TERM IN TODAY'S HOME-BUYING MARKET.

Byline: GREGORY J. WILCOX

It's hard to define normal.

Home sales in the San Fernando Valley plunge an annual 16 percent in October and the median price of a used house soars 27 percent, right back into record territory. And market watchers conclude that things are getting back to normal.

This market has not behaved in a normal fashion over the past 19 years, though.

Since 1987, we've been stuck in a boom-bust-boom cycle. The mid-1980s to the end of that decade - boom. From 1990 through mid-1997 - bust. Since then - boom.

Of course, the latest boom is the biggest equity generating run-up ever, the likes of which some people think we will never see again. (Of course, some pretty smart people thought the market was going into the tank three years ago.)

And the past five years certainly have not been normal, real estate-wise.

``We're back to what ... is a normal customary market. And anybody who's only been in real estate for five years has no idea what a customary market is,'' said veteran Realtor Tom Carnahan, owner of Carnahan & Associates in Woodland Hills.

The '80s boom ended noisily, with prices falling under their year-ago level for months on end. No one saw this train wreck coming, either. The median price, the point at which half the houses cost more and half less, got as low as $155,000 at the end of 1995, 36 percent under the prior record high.

The best guess now is that the latest boom cycle is nearing the end. Sales will decline next year in most areas and prices won't increase like in the past. But it won't look like 10 years ago, either.

If true, it's not such bad news for anyone who jumped aboard the equity train before the start of this millennium. The consensus is that current market values won't collapse.

It might not be such good news for recent boarders, though, since price increases are expected to be more normal in the coming years.

And it turns out there is a definition of a normal residential real estate market.

``A normal real estate market is one that probably ... is going to add 1 or 2 percent above the rate of inflation for a long period of time,'' said Daniel Blake, director of the San Fernando Valley Economic Research Center at California State University, Northridge.

One month doesn't make a trend - and the fourth quarter is typically the slowest - but several factors do suggest that October brought a glimpse of a market that is indeed past its peak.

Mortgage rates have increased for 10 consecutive weeks and are now at their highest level in two years. It's not going to put buying activity in the deep freeze, but with the median price of a Valley house at $600,000, any uptick keeps more potential buyers in the rental market.

But the rate situation is not as dire as 15 years ago, either.

``It's good to keep in mind that current mortgage rates, overall, are still below the 1990s average of around 8 percent for a 30-year fixed-rate mortgage and 6 percent for the one-year ARM (adjustable rate mortgage),'' Frank Nothaft, Freddie Mac's chief economist, said last Thursday.

The number of properties for sale has also moved up from record low levels over the past several months. Now there is roughly a three-month supply in the Valley, but it is still half what's considered a normal supply.

Homes are taking longer to sell, too. Of 36 ZIP codes tracked by the Southland Regional Association of Realtors, sales in 28 averaged between 61 and 120 days.

And there is the matter of a 27 percent annual leap in the median price. At this time last year, the expectation was that annual appreciation would be much less robust by now.

October may turn out to just be a price aberration. Last month there were five Valley ZIP codes - Calabasas, Tarzana, Sherman Oaks, Encino and Toluca Lake - that featured a median price of more than $1 million. Tarzana and Encino tied for the most expensive areas with a $1.3 million median.

The least expensive ZIP code was Pacoima, with a median price of $490,000. Only one other, San Fernando, had a median price under $500,000.

(A link to every ZIP code price is at www.dailynews.com.)

Prices are expected to continue to bounce up and down a bit in the coming months.

A year from now, most market watchers expect them to be higher. How much so is the question.

But sellers' expectations need to be tempered now.

``The syndrome of whatever my next-door neighborhood sold for I can get 5 percent or 10 percent more is gone and it ain't coming back anytime soon, if at all in my lifetime,'' Carnahan said.

Time will tell how normal this market will become.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com