In the woods near Dulles International Airport, where the roar of jet engines periodically drowns out the rustle of the leaves and the buzzing of the cicadas, a strange new noise filled the air one recent afternoon.

About 65 developers, real estate investors, brokers and bankers gathered under the oak trees beside a dusty back road. All eyes and ears focused on an auctioneer. His voice was almost musical as he led the bidding for a 6.8-acre tract of land zoned for office and warehouse development, but his words were more piercing than the airplanes.

When auctioneer Ted DeBruhl finally declared the ground beneath his feet "sold," Loudoun County and western Fairfax reverberated with the sound of the 1980s land speculation bubble bursting.

The winning bidder paid $2.36 per square foot, less than half the price the owners had been seeking when they began trying to sell the property more than a year ago.

As recently as last November, a small Loudoun County bank had accepted the development site as collateral for an $800,000 line of credit, and earlier this year, the Loudoun County tax assessor had said it was worth almost $1.5 million. The auction brought only $700,000.

"This auction sets a precedent because it identifies the bottom end of the market," said J. Duggan Hirt of Realty Diversified Services, a Fairfax developer that owns land near Dulles. "I think it's definitely lower than any {price} we've seen," he said.

"That's a bargain," said one of the sellers, builder Charles Besley, when he heard the price. "We took a loss."

The land belonged to a group of Northern Virginia investors called Dulles Associates Limited Partnership, led by Todd Shaver. The partnership bought the property in 1984, gambling that, before long, the demand for new homes, office buildings and industrial parks would extend to the fields and forests of eastern Loudoun County.

Many investors shared that outlook; the price of rural Northern Virginia land rose exponentially as it was sold and resold during the 1980s.

But by the time Dulles Associates won county approval to develop its property on Route 775, about two miles from the airport, a glut of new buildings had beaten it to the market, and lenders had virtually stopped making loans for new construction in the Dulles area.

Meanwhile, it was costing the partnership money just to hold the land. Some of the partners seemed to be feeling the pinch.

The investors took the unusual step of auctioning the land off after three brokerage firms searched for buyers and found none.

"It was a distress sale," Besley said. "I'm happy that it's gone."

Dulles Associates may have cut its losses, but other Northern Virginia real estate investors said the bills are just beginning to come due for years of speculative excess.

The costs threaten to further undermine the banks and savings and loans that financed the binge and the county governments that have grown dependent on an inflated but eroding property tax base, real estate executives said.

"I think it's going to be a real blood bath out here," said broker Bill Bryant, a fixture in Northern Virginia real estate who brokered many land deals when prices were rising, including Dulles Associates's purchase of the site on Route 775.

From Reston to Leesburg and beyond, investors are sitting on thousands of acres of land that they have no immediate prospect of developing.

It could take years for Northern Virginia's flagging economy to absorb the surplus of new buildings already begging for tenants.

Even if property owners can afford to pay interest on their land loans, they may be unable to repay or renew the loans when they expire.

In Loudoun County, 43.1 percent of the existing office space is vacant, nearly triple the D.C. area's vacancy rate of 15.4 percent, according to a July report by the real estate firm Spaulding & Slye Colliers.

In Loudoun, which is a small part of the overall Washington office market, about 2 million square feet of finished space is waiting for tenants and another 1.1 million square feet of unleased space is under construction.

Developers have plans eventually to build another 52.4 million square feet in Loudoun's Route 28 corridor, along Route 7, and in Leesburg, according to Realty Information Group, a market research firm.

However, those ambitious plans may be delayed indefinitely.

"There was a fever, a speculative fever running through this area that drove all these prices up, and everyone was trying to hitch their wagon to a star and make a million dollars," Bryant said. "All of these values have been puffed up. It's all pie in the sky. It was all a myth."

Bryant predicted that lenders will be left holding thousands of acres of land and that prices will tumble a minimum of 50 percent over the next three years, except for the property closest to the airport.

"It sort of got out of control," said William Hazel, a major real estate investor and contractor. "The bank boards and the officers ... they kept fueling the fire by making more loans."

Hazel said that some developers who promised to build roads, sewers and other public improvements to get their land rezoned will have to abandon those projects. "They'll be reneging on it because there simply is not any money there to do the job," he said.

While the real estate industry is suffering throughout the metropolitan area and nationwide, the Dulles area has special problems.

Unlike developers in close-in suburbs and downtown Washington, where land sells for as much as $2,000 per square foot, the Loudoun developers have been trying to create an office and industrial base almost from whole cloth.

It's only a 40-minute drive from downtown in light traffic, but the Dulles Associates site looks and feels like a different world.

Several years ago, David L. Powell, a retired truck driver, lived there in a house that had no plumbing, Bryant said.

Dulles Associates bought the land from Powell in June 1984 for $170,345, although the partnership put up only $40,000 in cash, according to Loudoun County records.

The partnership, in effect, borrowed the balance from Powell and his family, paying them 10 percent interest -- a little more than $13,000 -- annually.

In April 1987, as prices spiraled upward, the partnership mortgaged the land for $700,000 at Farmers & Merchants National Bank of Hamilton.

Farmers & Merchants extended the mortgage for a year when it came due in 1988 and later provided an $800,000 line of credit.

The partnership itself changed as some investors sold out and others bought in at new prices. It spent money to develop architectural plans and to steer the project through the county approval process.

A year ago, Dulles Associates was trying to sell the land for $1.6 million, real estate sources said.

Shaver, the majority owner, said the long absence of offers prompted the group to schedule an auction.

Although they are more common in other parts of the country, real estate auctions have been associated mainly with foreclosures in the Washington area.

The Dulles Associates auction was something of a novelty to local real estate executives.

Pat Casey of Coventry Ltd., the firm that ran the auction, said he expects the slowdown in the real estate industry to make local auctions a more common occurrence.

The Dulles land market had been stagnant for months when the day of truth, July 25, arrived. The blacktop on nearby Route 28 shimmered like a lake in the summer sun, but Casey's blue and white tent beckoned potential buyers.

As noon approached, a procession of Porsches, Mercedes and BMWs pulled into a clearing on the Dulles Associates site.

Real estate executives said they had come to take the pulse of the market, to gain a better sense of what their own land was worth. They might have left with some misimpressions; there was less to the ensuing contest than met the eye.

Only two people actually bid on the property.

One of them, James A. Riley, owner of a Loudoun County moving and storage company, was allowed to bid even though he did not present the required $25,000 deposit. A banker in the crowd privately vouched for him.

Considering lenders' general unwillingness to finance new land deals in Northern Virginia, Dulles Associates said it would lend the winning bidder 80 percent of the purchase price. As a result, it would have to wait three years to collect about three quarters of any funds generated by the auction.

Dulles Associates reserved the right to reject the final bid if it was too low. The partnership had set a threshold price, but it kept that number a secret.

In a climate of low expectations, auctioneer Casey dispensed with some of the usual sales hype.

"The seller realizes that this is a buyer's market, and consequently, he has priced this property as such," he told the audience. "I think this property is going to go for a very reasonable price today."

Then bid caller Ted DeBruhl, who worked for the auctioneer, cut to the chase. "Ladies and gentlemen, you know the property. You know what you want to pay for it. Let's have an auction sale.

"And what would I pay for it? And what would I pay for it? ... I open the bidding at two million dollars. I open the bidding at two, two million dollars. ... Will you give me two, two million dollars? Two, two million dollars... "

Silence.

"It's an auction sale. Give me a start. How much? What will you pay? Two million? Will you give me two, two million dollars ... two, two million dollars? Will you give me two, two million dollars?"

In the rear of the crowd, Casey conferred with Riley and announced that Riley had a bid. "Ted, it's not what you want; I got $400,000," Casey said.

DeBruhl acknowledged the bid and pressed for more. From across the tent, a man wearing blue jeans, cowboy boots, Porsche sunglasses, and gold chains answered the challenge. Michael M. Vlahos, a Fairfax physician, upped the bid by $200,000. And after a few minutes of quick, confused bidding, he had raised the stakes to $700,000.

Riley would go no higher, but the auctioneer persisted, filling the tent with rapid-fire, ineffectual exhortations -- the sound of the bubble bursting.

"Will you give me seven-twenty-five, seven-twenty-five?" DeBruhl implored. "Seven and a quarter? Seven and a quarter? Seven and a quarter? Seven and quarter? Seven-twenty-five? Seven-twenty-five? Seven-hundred and twenty-five? I have seven-hundred, will you give seven and a quarter? I'm bid seven-hundred. Give seven and a quarter? Seven and a quarter? Seven and a quarter. ..."

Turning his back to the crowd, Casey pulled out a cellular phone and called his client, Dulles Associates general partner Todd Shaver. The bid was $700,000, he told Shaver. Should the auctioneers let the property go at that price?

Shaver said yes.

DeBruhl renewed his efforts. "... Seven-twenty-five? Seven-twenty-five? Seven-twenty five. ... Does anybody else want in? Seven-twenty-five? Seven-twenty-five? Seven-twenty-five ... Anybody else? ... Seven and a quarter? Seven-hundred twenty-five thousand ... Last call ... Seven-hundred and twenty-five thousand? Seven-hundred and twenty-five thousand? Will you give seven-hundred twenty-five thousand? Seven and a quarter?"

Finally, he capitulated. "Sold. Seven hundred thousand dollars."

It took six and a half minutes.

When it was over, several of the spectators said they were buoyed by the outcome. Their expectations had sunk so low that they were encouraged to see the property sell, even at $2.32 per square foot -- $2.60 per square foot if they counted a 10 percent premium that the seller charged the winning bidder in addition to the auction price.

Shaver, too, said he was pleased. He had been prepared to settle for less, and despite his partner Charles Besley's dim assessment, Shaver said he personally made a profit on his six-year investment in the land.

Vlahos, 59, was sure he had gotten "a steal."

He and his partner, developer Louis T. Donatelli, own an adjacent tract. Two years ago, they had turned down an offer of $4.50 per square foot for that land, Vlahos said.

Vlahos said he plans to sell or develop the property in three to five years. Because he can combine it with the adjacent property, the Dulles Associates site was worth more to him than it might have been worth to others.

And what of the losing bidder? Riley, the owner of Alliance Moving and Storage Inc., owns some property down the road.

Riley said he entered the bidding to prevent the Dulles Associates land from selling at too low a price and undercutting the value of his own property. The deeper land values in the neighborhood drop, the more difficult it will be for him to renew the loan on his property when it expires, he said.

"My interest was to keep my land value up," Riley said. He said he was relieved that Vlahos raised his last bid and spared him the expense of putting his money where his mouth was.