Katie, One thing is for certain, an overall prediction is not going to apply across the board. Every market area is different.

Sandy

Sandy - yes, definitely!  I find most of the broad projections useless because of that, and always have to explain to buyers that those projections include cities with economies that are nothing like Washington's. 

Just so you know it will occur on March 18, 2008......you are a few days off.....but closer than most congratulations!!

Ryan - are you sure?  I had the 18th but I had forgotten about the leap year in 2008... :)

Hi Katie:  Thanks for such a well-written and well-linked post.  It really looks like you spent quite a bit of time putting it all together.

My take on when the "recovery" will start... or when the market will turn around is this.  In my brain I separate the country into two parts.  The first part of my answer concerns all those areas of the country that were really hot during the last two or three years.  Those mini-markets where prices shot up by 20% to 30% a year, or more.  Many of those markets had very large areas of new home construction. 

These are the areas that right now are experiencing a very large over-supply of homes currently up for sale.  They are also the areas where home pricing has dropped by fairly large percentages, too.  I think these ares will take much longer to recover... and that "short sales" will be a large part of what the current sellers will have to face to get their homes sold.

There are also areas where the growth rate over the past two years has been very gradual... but still tending in the positive direction of growth of perhaps two to five percent or so.  These areas, in my opinion, are areas where both buyers and sellers have experienced a sort of panic... which was in a great degree induced by all of the nationwide publicity and its "the sky is falling" mentality.  Many of these buyers are holding off... when they should be out in the market... purchasing a home.

I think these local areas will turn around in a much shorter time period... probably conforming more closely to what usually happens in those market areas or cities around this time of year.   For Fort Worth the quieter time is usually from mid or late October/early November to mid or late January/early February.

This is just my take on things... and simply based on watching the national and local markets, and the national media.  It also seems that the national media so strongly overshadows the local markets where the local market has been much less adversely affected.  I think that somehow there needs to be a continuing focus on covering those areas of the country that have not been so negatively affected.

Karen Anne, thanks so much for the well-thought out comments.  Absolutely agree re: local markets being overshadowed.  In this area, it goes even further...the entire metro area is being painted with a single brushstroke when it doesn't accurately reflect the market.  In reality, there are pockets that are doing well, and other pockets doing poorly. 

All forecasts I've seen from non-Realtors (not that there is anything wrong with that) is that things are going to get worse through Summer 2008 and the rebound in asset values and normalization of housing inventories will begin to manifest itself in the DC market in early 2010. 

Katie, IF we don't have a recession in 2008, it being an election year, I think we will have an upswing by spring.

Tom - I've seen a lot of similar views from the non-REALTOR community.  I've also noticed that renters tend to predict a longer recovery period, and owners tend to predict a shorter one.  

Gary - I agree.  The fundamentals in some areas, DC included, are strong, so I'd be surprised if 2008 doesn't have a little kick to it here.  That R word is a scary one, though.  

Gary and Katie - We are already in a recession, we just don't have the empirical data to substantiate it yet.   

Tom, I assume you mean that you believe that when the quarterly GDP numbers come out for 2007Q4 and 2008Q1 that each will show a decline?  Last quarter, if I recall, we had a slight increase in GDP, so the earliest we could declare a recession (in hindsight) would be at the end of the first quarter of 2008.

My statistics professor always told us, "If you beat your numbers hard enough, you can get them to tell you anything you want."  While the textbook definition of a recession is two consecutive quaters showing a decline in GDP, I would posit that in this case we are certainly experiencing detrimental economic conditions.

Between the frozen capital markets, decling real property values, rising inventory levels of both land under devlopment and housing, a general deterioration in consumer confidence and credit, rising commodities prices, a money supply that is increasing at an increasing rate and further credit turmoil on the horizon, I would say we are already experiencing an economic downturn, a recession if you will.  Of special note is that while GDP has shown growth, as modest as it is, the majority of it is due to the falling value of the dollar against other currencies, which has made US goods more desireable.  This is further exacerbated by the fact that the Fed continues to print money and expand the money supply.  It all fuels inflation and currency devaluation, which the Fed seems to not care about as much as it should.  The Fed is instead focusing on unlocking credit markets and generating liquity in spite of these issues, which is a short term fix with grave long term consequences.