If you're what's known as an "opportunity investor" in real estate, looks like your prime time may be now ... or very soon!

Economists say the next 12 to 18 months could be your best period since the early 1990s to pick up property at depressed prices -- discount diamonds in the rough and turnaround situations.

That's because the real estate downcycle is close to running its course in many local markets, where prices today are 10 to 25 percent below their peak levels of two and three years ago.

Serious investors understand that real estate is an all-weather, cyclical business: When times are tough for some owners, the opposite is true for investors with the knowledge, negotiating skills and vision to help distressed owners out of their jams.

We recently caught up with economist and real estate consultant Jack McCabe of Deerfield Beach, Florida -- just up the coast from Miami Beach. McCabe's company advises opportunity investors who are now buying waterfront and inland condo units and single family houses at 30 to 40 percent discounts off last year's pricing.

"If you're going to be in the game," according to McCabe, "you've got to be active right now before it's too late" -- the market bottoms out and the anticipated gradual rebound begins.

We also checked in with the most famous opportunity investor in American real estate -- Sam Zell, who once described himself as "the grave dancer." From the early 1970s through the 1990s, Zell turned himself into a multi-billionaire by spotting and acquiring distress property for pennies on the dollar in situations that he knew offered outstanding long-term value potential.

Zell was speaking recently to real estate economics students at the Wharton School at the University of Pennsylvania. "What's different about the current real estate down cycle?" he was asked.

The big factor today, said Zell, is financing. In all the earlier down cycles of the seventies, eighties and nineties, money was extremely expensive for investors -- or just impossible to obtain.

This time around, capital is relatively cheap -- and available -- whether from regular lenders or private equity sources. That's an important point for anyone thinking about whether, and how quickly, to get involved.

So where are the top opportunity markets right now -- places where real estate values are down the most compared with a year ago -- and where boom-time speculators are most eager to bail out of their mistakes at deep discounts?

The latest property price index from real estate data collector First American Corp. offers road signs to markets with plenty of distress. Here are the top ten:

• Riverside-San Bernadino, California

• Fort Myers, Florida

• Las Vegas

• Phoenix

• Miami-Fort Lauderdale

• Los Angeles

• Orlando

• Tampa

• Cleveland, and

• Metropolitan Washington DC.

Published: November 29, 2007

Use of this article without permission is a violation of federal copyright laws.

Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.