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)

How much of the run-up in prices was due to inflation, and how much to changes in the Washington area?

McEnearney : Inflation certainly was most of it. We'd been appreciating at a rate of almost 20 percent a year through the first half of the decade. And 20 percent a year is fine for a year, maybe for two or three years, but beyond five you're in real trouble. But this is a good area to be in. If you're staying three or four years, you're going to be all right.

Foster: Farther out [three or four years] is not long enough, but it will come back.

McEnearney: Interest rates were excellent, and they're even better now. We have good job growth in this area. The biggest company in the world is the U.S. government, and they're supporting the people in this area.

Foster: It's a good, stable area with good job formation.

What should buyers do now?

Foster: Stay away from ARMs.

McEnearney: It's a good time to buy. Interest rates are under 6 percent.

Foster: Foreclosures, that would be where I'd head. Buy for investment and rent 'em.

McEnearney: Yes. If the rent will support it, I'd pick up one. As long as the rent supports the payment.

Foster: At one time I owned 72 houses. They can be wonderful investments.

Advice for sellers?