The Washington Post has this update from the DC area. "In what may be the most telling sign yet that the real estate market here has shifted downward, median prices of homes in several parts of the Washington area have declined when compared with the same time last year. The drops are significant because they mark the first time in half a decade that home prices have fallen in a 12-month span, illustrating just how much the real estate landscape has changed after five years of double-digit growth in home prices."

"The areas with declines have some things in common: swelling numbers of houses for sale, slowing sales and lots of new houses on the market."

"In Loudoun, nearly 5,000 properties are for sale via the MLS. That compares with 1,800 a year ago. In the District and Fairfax County, the number of unsold homes and time on the market has also increased, boosted by a large supply of condominiums."

"The question for many local buyers and sellers is whether the small declines foreshadow big price reductions in the months ahead.'Could it be a 5 percent drop in prices? Could it be 10 percent? Whatever it is, it will be short-lived, because demand is right there on the sidelines,' said David A. Lereah, chief economist of the NAR."

"But others see a steeper, prolonged downturn in prices because of overbuilding in some areas, speculative buying and a run-up in prices that has outpaced affordability. Prices, they added, have actually declined more than the statistics indicate because sellers have been offering such incentives as help with closing costs."

"Too many sellers have not accepted that their houses are not worth as much as they had thought, said economist Mark Zandi. 'The market can't complete its correction until that happens.' Zandi sees Washington area home prices declining over the next six to 12 months by an average of 10 percent, with the condo market experiencing larger price drops. The good economy, he said, is 'not enough to save the market from this housing correction.'"

"Scott and Shirley Porter of Ashburn had no choice but to cut the asking price for their townhouse, there are just too many others for sale nearby. From their back yard, they can see three for-sale signs across the street. Out front, more neighbors are selling. Around the corner, there are four more."

"The Porters put their end-unit on the market last month for $458,000. That was right at the middle of other townhouses for sale in the neighborhood, he said. But in no time, the Porters found that their place had ended up at the top of the price scale after neighbors reduced their prices. So they lowered theirs, too, to $435,000."

"'It's amazing how much the prices have come down,' said Scott Porter. 'You feel like you've missed the bus.'"

"Neighbors Sheila and Chris Boyce put their three-bedroom, 2 1/2 -bath unit up for sale in March for what they thought was a competitive $445,000. They have since reduced it to $437,000, still $42,000 more than the $395,000 they paid two years ago."

"After costs, they would not be making nearly as much profit as they had imagined, even if they get their new price. 'We weren't trying to get rich on it or anything,' said Sheila Boyce. 'We thought it would be a lot more. Not hundreds of thousands, but at least something to put away.'"