The real estate market was a roller coaster ride in 2008. Next year, analysts predict a mixed bag that could include a flat market or further drops in the first half of the year before a recovery in the second half of 2009.

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Summing up the 2008 housing market, Glenn Crellin, was succinct:

“Challenging at best,” said the director of the Washington Center for Real Estate Research at Washington State University. “We clearly have a situation where consumers have exited the market, rightly or wrongly, on the presumption that housing prices are going to fall precipitously and they’ll be able to get tremendous bargains if they wait.”

Will they?

Truth be told, that’s too simple a question. Too many things that affect housing are in play for there to be a simple answer. Foremost among them are the deepening recession, the condition of the mortgage market, and the new administration’s plans to stimulate the economy.

Here’s a look at what 2008 brought and 2009 may bring.

Home prices

After a year like we’ve had, predicting 2008 appreciation in advance — and getting it right — was akin to pinning a bull’s eye on a bucking bronco. Take King County’s home appreciation, for example. There were many months when home prices were down but condo prices were up, or when prices declined two months in a row but at wildly differing rates, Northwest Multiple Listing Service numbers show.

But overall, through October, the median resale price of houses and condos together is down 2.2 percent. New-construction prices are down 4.3 percent, says Matthew Gardner, a principal in Gardner Johnson, a Seattle land-use economics firm.

Last year at this time, he predicted 2008 housing prices would drop up to 5 percent. (When this year’s final numbers come in, they’ll show widely differing price declines depending on neighborhood and home price range.)

Going forward, Gardner says, “we’ll be in a V-shaped year on prices.”

“The first half of the year we’ll continue to see declines,” he says. “The second half of the year we’ll start seeing a bit of an upward trend.”

In all, Gardner says, he wouldn’t be surprised if Seattle-area housing prices remain essentially flat — something that would actually be good news in some parts of the country.

What could make them turn around again? A stronger local economy that doesn’t have people wondering if they’ll lose their job is a huge part of it, he says. Lower mortgage-interest rates coupled with good mortgage availability are also factors.

Gardner says he hopes that the first 100 days of the Obama administration will offer a strong housing-stimulus package.

“We’re in a crisis of confidence as much as anything else,” Gardner says. If we start seeing confidence coming back, I think we’ll be one of the forerunners (in housing recovery).”

Mortgages

In August 2007 the country’s credit markets froze, and mortgage money all but vanished. Home sales shrank.

“Going into this time last year, we in the industry were wondering how long and far-reaching the effects would be felt,” recalls Rich Bennion, executive vice president and residential-lending director of Seattle-based HomeStreet Bank.

Now he knows the answer.

“This year turned out worse than anyone expected. It became more than just a mortgage crisis,” Bennion says. “It became a worldwide credit situation. Who really expected Fannie Mae and Freddie Mac to be taken over by the government?”

And then there were the failures of financial giants Washington Mutual and Lehman Brothers.

“It was a year full of surprises, and not very pleasant ones,” he says.

Going forward, Bennion is cautiously optimistic. The best news, he says, is the federal government’s recent announcement that it will buy mortgage-backed securities.

That should help inject more money into the mortgage market, making loans easier to get. Plus, interest rates have been dropping. When they recently hit 5 percent — and it’s being predicted they’ll go lower — that put them back to 2003 levels.

“Median home prices have dropped,” Bennion says. “You combine that with very, very low interest rates, and it kind of feels like we’re at or close to the bottom of the real-estate cycle.”

Home sales

2007 wasn’t a great year for sales, and as it ended, Lawrence Yun, senior economist for the National Association of Realtors predicted we’d see about the same number of home sales in 2007 and 2008. That prediction, it turns out, was much too optimistic.

Locally the number of single-family-home sales declined every month year over year until September, Northwest Multiple Listing Service data shows.

“It looked like it had stabilized,” recalls Lennox Scott, chairman and CEO of John L. Scott Real Estate. “Then the October shock hit when the stock market went down. Consumer confidence went to an all-time low in October. That was a big surprise.”

But for those who have stable employment, “the economic turbulence is creating opportunity,” he says.

“People have an opportunity to get a home they want in an area they want at a phenomenally low interest rate,” Scott says. “That’s a big deal. And they’re not buying in a multiple-offer situation with premium pricing.”

Scott thinks entry-level house prices (basically $500,000 and under in Seattle) have stabilized, so there may be no advantage to waiting.

In the mid- and upper-price ranges, “some people are waiting to see what’s happening,” Scott says, but even if those prices continue to decline, owners who sell at a reduced price also are likely to buy at a reduced price, so it’s a wash.

Looking forward, he is hopeful that the Obama administration will quickly pass a stimulus plan that will give the economy, and home sales, a boost.

Foreclosures

With a record one in 10 U.S. homeowners in trouble with their mortgage (at least a month behind or in foreclosure, according to a recent Mortgage Bankers Association study), the obvious question is, “When will the worst be over?”

Many people have predicted that will happen when the majority of subprime mortgages have reset to higher and potentially unaffordable interest rates. That forces some owners to take steps. Maybe it’s selling, or refinancing, or worst-case scenario, losing the home to foreclosure.

But Sam Khater, senior economist at First American CoreLogic, a mortgage-tracking firm in California, says it’s not so simple.

“Home-price declines are currently the biggest driver of foreclosure trends, and that’s overwhelming every other factor,” Khater says.

Falling prices are putting increasing numbers of owners under water. Owners in that situation, meaning they owe more than their homes are worth, are simply walking away.

Khater says predicting when foreclosures will ebb is a tough call.

“It’s better to look at conditions that would make it right for a turnaround,” he says. “When the supply and demand come into equilibrium, that’s when home prices will stop falling and stabilize, and that will help stabilize the foreclosure market to some extent.”

But with the U.S. a year into a recession, and 2009 not predicted to be a pullout year, Khater says he isn’t holding his breath that the worst is over.

Renting

As 2007 ended, Mike Scott, of Dupre + Scott Apartment Advisors, said renters should see rents rise and stiffer competition for apartments. The reasons: Tight mortgage lending was keeping many renters from becoming homeowners. Plus, many would-be buyers were taking a wait-and-see attitude toward home prices.

Well, some of that happened. Central Puget Sound rents climbed 7 percent in the past year, Scott said. Going forward, it would seem like the same factors Scott cited for this year would be in play again for 2009. But the apartment situation has changed considerably.

For 2009 and 2010, Scott expects that vacancies will grow, but rents won’t. However, the economy is deteriorating so rapidly that it’s hard to say exactly what that means. In September, Scott forecast that vacancies would reach almost 6 percent by early 2010. Then this month, he revised that upward to 7.3 percent.

Job losses decrease apartment demand because renters double up — one reason vacancies are expected to climb.

The other big one is an increase in apartment construction.

Scott says 2,620 units opened this year in 20-unit or larger buildings in King, Pierce and Snohomish counties. That’s about 500 more than had been predicted.

Currently, 8,900 units are under construction. Additionally, some buildings planned as condominiums may become apartments instead, and some apartments formerly converted to condos are being reconverted into apartments.