Jon Lansner of the Orange County Register interviewed USC real estate finance professor Tracey Seslen on where we are in the housing cycle.

Us: So how does this up/down cycle compare, nationally and locally, to previous real estate cycles?

Tracey: In the past, housing downturns have often accompanied a more general recessionary environment. In this particular instance, the housing downturn can be pinned to very specific events, and may be a major cause of recession, rather than the other way around.

Thank goodness their wasn’t a recession in 2006! Can you imagine what would have happened to Arizona real estate prices if the economy tanked in 2006?

Us: Any guess to when we might hit a bottom, nationally or locally?

Tracey: My guess is similar to others’ “” mid-2009, or possibly earlier.

Okay, I was guessing, as were many, that late 2008 or early 2009 would be the bottom for metro Phoenix as a whole. Maybe late 2008 to mid-2009 would be a better guess.

I think that the change in the conforming loan limits could be the most influential aspect of the Bush stimulus package on account of the fact that it actually provides real (as in non-illusory) liquidity to families in places that need it most “” traditional high-home-price states of California, New York, and other parts of the east coast.

It’s nice to hear some positive news!

Us: How do real estate cycles compare to other assets? There’s been talk that home prices are often ” sticky” on the way down, but you couldn’t tell that this time!

Tracey: … One of the reasons we’ve seen transaction volumes hit record lows isn’t just because people don’t want to buy or can’t get the loan they need ““ it’s because sellers aren’t willing to sell their properties for what buyers are willing or able to pay.

Interesting point.

I think sellers are usually wrong when they decide not to sell because they want to, “See if the market turns around next _____.”

Real estate price trends don’t usually change quickly. Home prices are a train that takes years to change direction. Think about the size of the run up in prices and then think about the number of years it may take to correct it.

If you are a home seller and you hear yourself saying, “I’m just going to wait out the market” then you will probably end up selling for less money later. You are betting against the current tide.

Us: How do ” external” factors, like credit crunches or Fed cuts, factor within real estate cycles?

Tracey: … Fed rate cuts will eventually filter down to Treasury rates and other rates to which loans are indexed, and potentially provide cheaper safe (i.e. 30-year fixed) loans to those looking to buy now. The higher conforming loan limits will make for cheaper borrowing as well. If the cost of funds decreases, more people on the fence about purchasing will take the plunge and get into the market for a home sooner.