There’s considerable pain ahead in the region’s housing market as prices drop an additional 10 percent to 20 percent in coming months, but the bottom is likely to come late next year with a slow recovery to follow.

That was the message delivered last week at a panel on the real estate and capital markets at the annual Milken Institute State of the State conference at the Beverly Hilton.

“We could be six to 12 months out from the bottom,” said Ross DeVol, director of regional economics for the Milken Institute.

Housing prices in Los Angeles County have already plummeted 35 percent over the past year, from a record high of $585,000 in summer 2007 to $380,000 in September, according to data from HomeData Corp., an information service in Hicksville, N.Y.

An additional 15 percent drop over the next several months would bring the median price down to about $325,000, a whopping 45 percent plunge in just two years. That would make for the most rapid decline in home prices since the Great Depression, more than double the 20 percent drop in prices from 1989 through 1996.

DeVol noted that foreclosure problems have spread far beyond the subprime market and are affecting almost all types of adjustable rate mortgage loans, even for prime borrowers. As the rates on these loans continue to reset, he said foreclosures will continue to mount and prices will drop even more.

“Half of all sales are now foreclosed or otherwise distressed properties and that number will only grow as more foreclosures hit the market,” he said.

Bobby Turner, managing partner of Canyon Capital Advisors LLC, sees an even greater drop. He’s expecting prices will fall an additional 20 percent from current levels before the bottom is reached.

But on the bright side, the panelists concurred that the region is about a year away from turning around. That’s generally in line with the forecasts from the UCLA Anderson School of Management and the California Association of Realtors both of which say the bottom should come sometime in 2009. But that’s sooner than other more pessimistic forecasts for the nation’s housing market, with some saying the bottom won’t be reached until 2010.

As prices fall, more homes sell faster, reducing unsold inventory.

“California is clearing the market faster than other states, partly because prices are falling so far, so fast,” DeVol said.

As a result, home affordability is quickly rising at least for those who can meet more demanding lending terms now in place.

“If you have enough cash to pay for the deal, you’ll do OK,” said Robert Satnick, chairman of the California Mortgage Bankers Association. “In fact, you’ll do more than OK given where prices have fallen to.”