It's time to go out on a limb! With the new year fast approaching, I'm going to give you my version of what to expect in 2008. I am humbled before I even begin by looking at some of the weightiest minds in the industry and how their 2007 predictions worked out. Dr. Steven Fuller is one of the most knowledgeable real estate gurus in the greater DC area. But he was way off base in his optimstic 2007 predictions. But then I remember Mark Twain's quote about economists "If you laid all the economists in the world end to end, they still couldn't reach a conclusion." So, how badly could I do?!

I'm going to start with what I see overall for our area. Then I'll single out a couple of counties for some specific comments.

First of all, I see no huge market swings in either direction. There will be relative stability, although not the kind most sellers are looking for.

Prices - In our area we'll see some additional price declines. There are two ways to look at price declines. If you look at sold prices, which is how this statistic is usually generated, the decline will be larger. That's because while a large number of homeowners have already significantly lowered their prices, those homes generally haven't sold yet. As they sell, we'll start to see that really reflected in the statistics. But a lot of that decline has already happened. There are specific neighborhoods where the word hasn't quite gotten through yet and prices will need to fall more. If you're looking to buy, make sure you ask your real estate agent about overall market statistics for that specific neighborhood.

If you look at the average list price, I don't believe you'll see huge drops. Again, much of that price cutting got done in 2007.

Volume - I expect this number to be only slightly better than 2007. Any larger influx of buyers will have to wait for greater overall economic confidence. My prediction is that we won't see much of that in 2008.

Inventory - Flat initially, a big jump in early spring, and then a gradual decline the rest of the year. I believe we'll end 2008 with inventory slightly lower than in 2007. I'll really go out on a limb here and say that I see a much larger inventory reduction in 2009.

Interest rates - I know there's a lot of hope out there that mortgage interest rates will drop significantly and bring hoards of buyers out. The economic indicators I see don't lead me to believe there will be much if any drop in interest rates in 2008. Inflation worries seem likely to continue to plague us all year. That doesn't mean I think we'll experience huge inflation. But it will worry the Fed and other policy makers and that means not much relief on interest rates.

A couple of special notes. These predictions are what I see for the counties where I do most of my business: Fauquier, Prince William, Warren and Loudon. The other two counties I serve, Rappahannock and Culpeper are deserving of special note.

Culpeper county will suffer for a very long time. The overbuilding in Culpeper county is the stuff of legend. We'll still be talking about this 20 years from now. Unfortunately, prices will continue to decline deeper and faster here than anywhere else. Unless there is a huge new employer in Culpeper County very soon, we're looking at several more tough years.

Rappahannock County is on the other end of the spectrum. Since construction is almost non-existent and since it remains a highly desirable location for many people, the real estate market has generally been more stable. We've seen some softening in this market too, but I don't expect much additional softening in Rappahannock. The biggest factor affecting the market here right now is the credit crunch and I believe that situation will improve significantly in 2008.

There's my prediction. What do you think?