Real estate review and predictions: What follows a decade of boom and bust?

The U.S. housing market has been in a slump for nearly four years. Home prices have fallen 30 percent since reaching their peak in 2006, leaving nearly a quarter of borrowers owing more than their homes are worth. Millions of homeowners have fallen into foreclosure.

So what will 2010 bring? Many economists expect to see a continuation of the tentative signs of healing found in the housing market in 2009.

Reduced prices, low interest rates and a tax credit for first-time home buyers helped boost the market in 2009. The pickup in sales translated into a stabilization of prices in some parts of the country. In Northern Virginia, for example, median home prices bounced more than 11 percent in November compared with a year earlier. That could continue in 2010 as long as the economic rebound persists, economists said. But risks remain, including an expected increase in mortgage rates later this year and rising unemployment. "The unemployment rate is a big concern that could slow the recovery process," said Lawrence Yun, chief economist for the National Association of Realtors.

Will home sales continue to rebound in 2010?

Economists largely agree that the rebound in home sales that began in 2009 will continue in the new year. The National Association of Realtors predicts that sales will rise 10 percent this year, after a 5 percent increase in 2009.

The rebound could be even stronger in the market for new homes. After reaching the lowest inventory levels since the 1970s, there are likely to be about 500,000 new homes sold in 2010, an increase of about 30 percent from last year, said Dave Crowe, chief economist for the National Association of Home Builders.

But that's still far from the 1 million new-home sales that occur in a normal year, Crowe said. "The rate will appear rather impressive due to the rather dismal levels we achieved in 2009," he said.

The Washington area housing market is rebounding faster than many of the hardest-hit parts of the country. In November, home sales jumped 90 percent in Prince George's County from a year earlier, and 42 percent in close-in Northern Virginia, including Arlington and Fairfax counties, according to data from Metropolitan Regional Information Systems, the local multiple-listing service, which tracks local sales data. Sales were up 98 percent in the District and 75 percent in Montgomery County.

As in the single-family market, condo sales in the Washington region have risen where prices fell the most earlier, including Prince William and Loudoun counties, according to Delta Associates, a research firm.

Those sales increases are likely to continue in 2010, reflecting the pent-up demand of buyers and because sellers were waiting for signs that the housing market has improved, economists said. "I anticipate we're going to keep going along this path we're on. More houses are selling and selling at a faster pace, and inventory levels are starting to go down," said Michael Cerrito, president of the Prince George's County Association of Realtors.