"This has not been a fundamentally healthy economy in the last three years," he said. "As home prices continue to fall throughout 2007 [they] will ultimately catch up to consumers…and our economy as a whole will have to balance its books. We're a nation on a spending binge, which must come to an end. All this is pointing to an economic slowdown, which has put the [Federal Reserve] between a rock and a hard place."

Though there was some discrepancy about just how much the housing slump and subprime mess will affect the economy and market on all levels, most panelists agreed that much of the excess capital that once graced the Southland is now overstate and overseas.

"A lot of California investors are looking [to places beyond the state] for stable, low-risk environments," said Mike Kamm, CEO of NAI BT Commercial and a participant in the deal flow and velocity panel. "When things cool off in a market like Los Angeles, it tends to affect the periphery and international markets a lot. Two especially hot markets right now are Edmonton and Calgary."

Aside from Canada, investors are also turning toward Asia, Germany, France, India, Mexico and parts of South America, citing incentives such as population growth, additional diversification and value opportunities.

"Global macroeconomic fundamentals are pretty good right now, as real estate has become a mainstream asset class for investments and now drives a huge inflow of liquidity," Pralle said. "The most attractive real estate investment place today is probably Japan. Prices are not at all-time highs--land prices are going up gradually and nowhere near cyclical peaks--and interest rates are also very, very low in Japan."

Ironically, just as U.S. investors seek opportunities elsewhere, foreign investors are pouring money into American investments--despite the dollar's fluctuating value.

"We are critically dependent on foreign asset markets," Thornberg noted. "Lots of assets are being held by foreigners, like mortgage-backed securities and mortgage-backed bonds, and these assets are going to take a hit" due to subprime lending.

Panelists estimated that foreign investors make up 7% of America's entire capital stock; they predict this number will grow as America enters into an investment wave from Ireland, the Pacific Rim and Australia.

Economists such as Dr. Raphael Bostic of the USC Lusk Center also cautioned that events that are politic-, terrorist- or resource-driven may not only cause problems for foreign market investors, but for the US economy as well.

"We've become so heavily dependent on resources and energy sources like oil that if things happen in China and the Middle East they can then ripple through our economy," he said. "This would cause a major loss of control."

Other panels at the event included topics such as office and industrial leasing, investments and developments; the convergence of retail and mixed use; alternative investments; investment market exit strategies; creative debt and equity structures; and what's driving apartment and condo deals.

Additional highlights included the presentation of a Lifetime Achievement Award to Don Koll of Newport Beach-based the Koll Co. and also opening remarks by Real Estate Media group publisher and editorial director Michael Desiato.