Valley Commentary : Post-Traumatic Sales Disorder : After a short-term dip, San Fernando Valley property values and real estate transactions should rebound from impact of the Northridge earthquake.

The short-term effect of the Northridge earthquake on resales of homes in the San Fernando Valley is likely to be profound. A temporarily stall will later give way to a phantom mini-boom as disaster-aid dollars appear.

Over time, however, the terrible temblor’s impact will probably diminish.

Prices might rise if the quake weeded out excess or antiquated housing inventory, thus making room for new, expensive homes, but that’s highly unlikely.

Not to diminish the personal tragedy, but the destruction and damaging of an estimated 10,000 homes will have a relatively small impact on the county’s housing stock of 1.7 million residential units or the San Fernando Valley’s more than 500,000. The damaged properties represent 0.6% countywide and 2% in the Valley.

That suggests the earthquake’s impact will be greatest in areas most directly affected, those nearest the epicenter and in localized zones of devastation.

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Unfortunately, it occurred just as the region’s economy showed signs of emerging from its three-year recession.

The sales of most of nearly 1,000 homes that were waiting for escrow to close were stopped cold. Yet within days of the tragedy the transactions involving those 853 single-family homes and 144 condominium sales showed signs of continuing their march forward. The same was true for households caught in the midst of a refinancing. The process stopped with the earthquake, but one week later most refinances were back on track.

The quake devastated some people and rattled everyone, but it did not demolish the economic engine that propels Los Angeles and makes the city the hub of the Pacific Rim economy.

Before a sale or refinance could proceed, buyers and lenders needed to be convinced that the properties had no major structural problems--such as a shift in the foundation, noticeable settlement, broken windows, damage to the chimney or roof, or cracks of greater than a quarter-inch in diameter in the foundation.

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Members of the San Fernando Valley Assn. of Realtors reported that lenders and buyers involved in those pending transactions generally insisted on a post-quake inspection. If the property survived intact, the sale or refinance was allowed to continue.

Some people believe that the infusion of hundreds of millions of federal disaster-aid dollars will provide a shot in the arm to the local economy.

That may be. Yet there also is a school of thought that suggests today’s fast fixes ultimately translate into higher taxes and diminished public services, which, in turn, work against a vibrant local economy.

In other words, disaster dollars don’t get us ahead of where we were prior to the quake, but merely let us make up for some of what we lost--which doesn’t sound like real progress.

If that’s true, no amount of disaster aid can ever make us totally whole, although time does heal most wounds.

The destruction from the 1971 Sylmar quake was almost as severe as this year’s, but real estate values eventually returned to their pre-quake levels. Outside Sylmar, where damage was most severe, most of the earthquake’s effect was relatively short-term. Like this year’s quake, the Sylmar quake also came during a recession, which was due to defense and aerospace cutbacks caused by the end of the Vietnam War.

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Will the 1994 Northridge quake drive people out of the area, thus forcing resale values even lower than the already low recessionary levels?

That seems unlikely.

No significant exodus of population occurred after the 1989 Loma Prieta quake in San Francisco, which registered 7.1 on the Richter Scale, killed 67 people and ran up a road repair bill alone of more than $1.6 billion. Some areas of San Francisco prospered more than others, and businesses reported a mixed bag of successes and failures.

No doubt some people will leave. But many will decide to rebuild. Others may decide to move into the San Fernando Valley from outlying regions--Lancaster, the Antelope Valley--to be closer to work and avoid the terrible traffic jams caused by the quake.

Will a new resident of equal buying power and equal skills replace each resident we may lose?

Only time will tell, but I believe that the residential market will soon resume its recovery from recession, that new industry will replace what we have lost, and that life will return to normal even before all the visual reminders of the quake have vanished.

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Hurricanes buffet the seaboard states. The East Coast suffers sub-zero winters. The Midwest cowers before terrible tornadoes. And California rocks ‘n’ rolls to earthquakes.

Every place extracts its price. Still the people keep coming, homes are bought and sold, and a new generation is born.