2008 was, without a doubt, the single most challenging year in real estate in Washington, DC in at least 30 years. And the nation-wide problems in real estate helped to precipitate the takeover of Fannie Mae and Freddie Mac, the bailout of numerous banking, insurance and financial institutions and the loss of 33% of the value of the Dow Jones stocks.

In Washington, DC, the number sales in 2008 was 40% less than the peak year of 2005. As the chart to the right indicates, there were just 5,457 sales in 2008, down from the 9,175 just three years ago. So where is the market headed from here?

There are a number of reasons to be pessimistic about a recovery in our market anytime soon. The wave of foreclosures isn't over yet, and there are still plenty of interest rate resets coming. Outlying areas in our region have seen the most dramatic price declines, and their recovery will take longer. And the biggest one is the general sense of uncertainty that exists about the overall economy.

Nonetheless, there are also reasons to think that things will improve in 2009. Mortgage interest rates are as low as they have been in 40 years, and there is pent-up demand to purchase homes - the current level of purchases is well below our historic norms. DC offers the best access to mass transit at a time when people are more concerned about gas prices and the environment.

But the most important reason is jobs. George Mason University's Center for Regional Analysis projects net job growth of 23,700 in 2009 in the region, about a quarter of which will be in Washington. We expect a market that will limp along through the first half of the year, with a steady recovery beginning by the third quarter.