Brokerage Barons See Washington Making a Slow Recovery

John McEnearney of McEnearney Associates, left, and P. Wesley Foster Jr. of Long & Foster say they're finding it tough to make a profit. (By Dayna Smith For The Washington Post)

Foster: That was the best year we ever had in our lives, but it did start in that fourth quarter. From 2005 to 2006, our business was off 30 percent. From 2006 to 2007 we were off 12 percent.

Did you think the boom would end?

Foster: Oh sure, it had to. We had five years that were too good to be true. This is a cyclical business.

McEnearney: We just didn't think it would come to an end with such a big bang. People were trying to buy more than they could afford. They were anticipating that everything would work out because prices would continue to rise 20 or 30 percent a year. And that had to come to an end.

How much longer might this go on?

McEnearney: I would say it's probably going to be at least another year before we're going to be out of this. This market could continue into 2009 before returning to a more normal level of activity, as it surely will.

Foster: My pick is the third or fourth quarter, we'll see a little bit of pickup. Next year will be fair. Certainly by 2010 there's gonna be so much damn pent-up demand.

We're seeing life in some places already. Our Gaithersburg/Potomac office is just as lively as it can be. We're going to have a good April. And yet other places are still floored. Close-in has perked along pretty well, anyway, and it's still lively.

But, yet, and I've never seen this before in all our other recessions, there is a ring around Washington now. You go out to Prince William County, 40 to 50 percent of our sales are foreclosures or short sales. Go out to Prince George's County and 25 percent are foreclosures or short sales. Loudoun, it's probably 20 to 25 percent. Montgomery County is not nearly as bad, say it's 12 to 15 percent, and 13 percent of Fairfax. That has never been! This has never happened here!

We're in the Philadelphia market. We're in Baltimore, Richmond, Roanoke, Norfolk. We're on the Eastern Shore. I checked all those markets, and there are a few foreclosures but nothing like there is in this outer ring around Washington. Why is that happening? I don't know why! I know it's happening in Phoenix, in California, in Florida, and in this outer ring around Washington. I have no idea why, I really don't.

McEnearney: Fortunately we don't have that kind of a problem because I've kept our offices within the Beltway, and that was done with conscious intention. It's helping us out.

Foster: But we're getting used to it. We're loading buses up [to tour foreclosures]. Now, that's a bit of a gimmick, but we're getting used to short sales. The banks are getting used to 'em. They're speeding up the handling of them, but not as fast as we would like, because they're still running about two months slower.