Now that many homeowners have seen their home values almost double since the local economic recovery began in the mid-1990s, I am starting to get calls from friends and clients asking me to opine on the topic of “bubble bursting.”

I think they really want me to tell them specifically — month and day — when the local economy will tank and when their wonderful “re-fi machine” will have a value below their maxed out mortgage. These are the same folks who were under water in 1990 and swore they would never ever again advance to the leading edge (or is it lending edge?).

Well, the truth of the matter is that very few San Diegans reached the lending edge in 1990 when some of our favorite local employers parted ways with Wall Street.

Let’s look at two of the basic factors:

• Very few San Diegans lost their homes to foreclosure in the recession of the early 1990s. Total foreclosures averaged 3,493 each year from 1990 to 1994. Thus, of the 842,000 properties in San Diego County, a total of four-tenths of 1 percent annually were foreclosed in that dismal four-year period.
  
  
• In 1994, 28 percent of San Diego homeowners had no mortgage on those homes — admittedly, I don’t know any of those people — and the average monthly mortgage payment was $939. Note that the average age of a county homeowner was 53 in 1990 and that person had owned the home for 14 years.

Now let’s look at what really happened in terms of home prices in relation to the economy.

It is not surprising that unemployment rates and housing prices tend to work in opposite directions. The unemployment rate rose from 4.6 percent to 7 percent between 1990 and 1994 (and then receded to 3.1 percent by 2000). After increasing 50 percent from 1987 to 1990, home prices receded, declining 11 percent from 1990 to 1994, as shown on the accompanying table.

Who got stung in 1990? Those who bought at the very top of the market in 1989 or early 1990, particularly on the high end. For instance, La Jolla home prices declined far more precipitously than in Mira Mesa or Chula Vista. In La Jolla, from a peak average of $829,000 in 1990, the average resale price plummeted 18 percent to $679,000 in 1994.

Remember, of course, these are average prices on units that sold. When the market goes south, most folks just hold on. Only those who have to sell do so. And for those who did hold, it’s nice to know the average sale price in La Jolla is approaching $1.5 million.

Of course, if you didn’t sell during the recession, you are well ahead of the game, but not quite as ahead as those who sold at the top of the market and waited until 1994 to buy again. Unfortunately, the folks in that category could fit into the back seat of an Austin mini.

Another factor that must be considered in this analysis: From 1990 to 1994, a glut of residential units and a fair number of new unsold units were on the market.

Now, conversely, listings as a percent of sales are at an all-time low with virtually no standing inventory of new homes. In the 1980s, we constructed an average of 23,000 new housing units annually compared to less than half that in the 1990s. In other words, we are adding 1.5 percent annually to our housing inventory compared to more than twice that in the decade of the 1980s.

From the big picture standpoint, the Dow Jones has risen from 2,800 in 1990 to more than 10,000 today (an average of 33 percent annually) so our pension plans and sense of security are way ahead of the past decade. Our local economy now is far more diversified than in past decades and the county continues to add jobs at a pace of 2,000-plus per month; not quite the ebullient pace of 1996 to 2000, but acceptable nonetheless.

Therefore, as you have concluded by now, I have no reason to believe that either our local economy or its housing market is moving toward the cliff. It is true that our home prices are reaching heady levels, but we have seen that in every modern recovery. Remember that most folks must qualify for a home on a traditional loan-to-value ratio and based on their earning capacity. The rules of the game have not changed in decades.

Do I believe home prices will continue to accelerate at silly rates? No. I think the rate of increase will decline to the 4 percent to 5 percent level this year and next, and that’s not so bad.

Somewhere in an analysis, a factor should be included for the pleasure one gets out of a home. Only in coastal California is a home viewed as an investment machine.

Overall, my advice is to relax, re-fi, revel in the knowledge that you were smart enough to move from Cleveland many years ago. Your old home there is still worth $34,950. Maybe less.

Alan Nevin is director of economic research with Market Point Realty Advisors, a consultancy providing real estate and demographic statistics, feasibility studies and litigation support to the California land-use industry and legal professions.