Randy Zisler, chairman and CEO of Zisler Capital Partners in Los Angeles, said he sees real estate securities "bottoming in 2009," and that the "middle of the year is a good time to start looking to buy."

Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., who also agreed the third quarter is the likely bottom for the regional and national economies, pointed to some possible high notes, including the stabilization of the LA area's aerospace manufacturing industry, possibly thanks to revived interest in C-17 Globemaster production that has been expressed by incoming president Barack Obama. Boeing Co. is on the verge of issuing a "stop work" order to its suppliers for the C-17 cargo aircraft, which is manufactured in Long Beach, with several subcontractors located throughout Southern California.

[IMGCAP(4)]"Obama seems to like the C-17," Kyser added. However, Kyser and the other panelists expressed concern about the financial well-being of state and local governments.

Referring to California's financial status, Thornberg went so far as to say "we're running out of cash," and he called the state's financial situation "a total mess."

"At the end of February, we run out of reserves, we have no cash," he said, adding that if politicians in California don't find an effective way to navigate though the state's financial problems, the state could find itself being run in receivership by the federal government.

Not only will the government likely come after the real estate industry for money, Thornberg noted, but "there are going to be lots of small cities that are going to go bankrupt."