SIDELINES MIGHT NOT BE SAFE IN HOT HOUSING MARKET.

Byline: GREGORY J. WILCOX

Even though home prices are at record levels - again - fence sitting might not be a prudent investment strategy this summer.

It sure seems like a tempting option in this superheated environment - retreating to the sidelines while waiting for the market to cool.

Probably won't happen this year, though.

Last week, as expected, the California Association of Realtors said both sales and price records will fall this year.

Sales are now expected to increase 1.4 percent from last year's record total of 624,740 units.

And the median price is expected to jump 16 percent over last year's record and hit $523,150.

Credit interest rates that remain near historic lows.

For the last two years the association has predicted a lower rate of sales. But that didn't happen because interest rate did not make a big move.

``We thought the fixed rate would hit 6.6 percent on average and head into 7 percent late this year,'' said Robert Kleinhenz, the association's chief economist.

Also, demand remains strong and supplies tight in some of the state's biggest markets, including Los Angeles.

So the wait until things cool off option might not pay off, said the Lusk Center for Real Estate at USC.

Nor do the center's economists see an evildoer ready with a very large pin with which to prick the state's home price bubble.

``No housing bubble is going to burst and prices are not going to suffer a precipitous fall,'' the center said last month.

The center advises that fence sitters might consider making the move into the market before years' end to ring up the tax break from mortgage interest and property taxes.

Delores Conway, director of the center's Casden Real Estate Economics Forecast, said that the market will continue on its current course, at least for the near term unless there is some unexpected shock to the economy.

``We have much less land available, the supply is really limited right now and we have more people,'' she said.

But anyone getting into the market must be comfortable with their monthly mortgage payment.

And buyers should carefully analyze which mortgage product they will use because a wide range is available.

And special care should be taken when choosing an adjustable because those rates are getting close to fixed rates.

``We would encourage everyone to go first for a fixed rate mortgage if possible because the difference (in rates) are not as great and there is no need to assume that risk of mortgage rates rise,'' Conway said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com