If you're shopping for a home under $500,000 in Southern California, "now is the time to buy."

But Al Gobar says that hesitantly.

The confidence this real estate consultant has is surrounded by a cloud of uneasiness over the economy because of the federal government's massive intervention in propping things up - namely the hundreds of millions injected into Fannie Mae and Freddie Mac.

The owner of Anaheim-based Alfred Gobar Associates, a real-estate and economics consulting firm, sees Southern California real estate prices flattening between now until the end of 2010, or possibly into 2011, before starting a very slow rise.

And when they go up, don't expect more than an average 3 percent increase per year.

"Recovery means they stabilize," he said during an interview after the Real Estate Research Council of Southern California's third-quarter update on Thursday at Cal Poly Pomona. "Over the long run, you can't have home prices grow much faster than inflation."

Were you hoping for a V-shaped recovery in Inland Empire home prices?

If so, you're mostly out of luck.

But Gobar says to keep an eye on Chino Hills and certain cities in Coachella Valley, since these areas have the greatest potential.

Out of every Southern California region, High Desert home prices will take the longest to recover, he said.

For homes ranging from $600,000 and up into the millions, "I don't see a fast turnaround," Gobar said.

The council's third quarter report shows that home prices are still taking a beating in several regions across California, although many sub-areas are stabilizing.

There's no indication of prices rising significantly any time soon, according to Michael Carney, executive director of the council.

For the combined seven-county region in Southern California, the median home price has dropped to what it was in early 2003 - about $169,000.

Gobar gave insight into more than just real estate prices.

The former USC economics professor says he's usually optimistic, but not as much recently.

He says bank bailouts, proposed healthcare legislation and federal stimulus initiatives worry several entrepreneurs in the small business community.

"The business community feels the political community is anti-business - they're scared," Gobar said. "They're worried about higher taxes, stimulus, healthcare penalties - they're just afraid."

The "too big to fail" philosophy exacerbate things in Gobar's opinion. The government's multi-billion dollar lifelines extended to companies such as General Motors and American Insurance Group don't stir confidence in the business community over the long run.

"It's foolish," he said. "The failures ought to fail."

Two things he foresees: higher inflation, due to the stimulus funds and bailout money pumped into the economy, and what Gobar describes as a "big underground economy," i.e. more small businesses trying to fly under the government's tax radar.

That phenomenon is already taking place.

"There's a whole lot of business activity going on that nobody even knows about," he said.