Real estate industry insiders are optimistic that the relatively resilient economy here can carry the residential and commercial real estate sectors through the national recession. The residential sector is expected to bottom out here and perhaps begin to rebound in 2009, though the market for retail space likely will be "ugly," at least for the first half of the year, they say.

Stable home prices, an increase in mortgage applications, and historic low interest rates may stop the bleeding in the Spokane residential market, says Rob Higgins, executive vice president of the Spokane Association of Realtors.

In the first 11 months of 2008, 4,619 homes were reported sold in Spokane County through the Spokane Multiple Listing Service, down a whopping 29 percent from 6,309 homes sold in the year-earlier period. That would make it the third consecutive year of declining home sales here since 2005, when the number of homes sold peaked at 7,521.

Total home sales volume through November this year was $954 million, down 30 percent from $1.37 billion in the year-earlier period, the MLS reports.

Yet, home values haven't fallen significantly, Higgins says.

The median home sales price during the first 11 months of this year was $184,370, down just 0.3 percent from $185,000 in the year-earlier period. Higgins says he anticipates that home prices will hold steady in 2009.

"Compared to the rest of the country, the Northwest is in relatively good shape, and the Inland Northwest is in good shape compared to the Northwest," he says.

Steve Hildahl, broker at Windermere Real Estate/Cornerstone, says he thinks the real estate market will improve in the second or third quarter of 2009.

"Our economy is very stable," Hildahl says. "A lot of the downturn is because people are scared, and they have a wait-and-see mindset."

Financing should not be an issue for a majority of prospective home buyers, he says, adding, "If you have decent credit and a job, there's financing out there."

Higgins says he's expecting Spokane County home sales will level off in 2009 at about 5,000 homes, with a total sales volume of about $1 billion.

"If we're somewhere close to that, we'll be all right," he says.

Marshall Clark, president of Clark Pacific Real Estate Co., says sales and lease volume for retail space was strong during most of 2008, but appears now to be cooling. Clark says he's bracing for at least two difficult quarters in 2009.

"I think 2009 may perk up in the second half," he says. "The first half is going to be ugly."

Clark anticipates the best segment of the retail market will be small, mom-and-pop businesses and those that specialize in the lowest prices in their categories.

"Big retailers are out of the picture," he says. "Cheap food, clothes, and merchandise is in. Anything expensive—even midrange—isn't happening."

Clark says some retail tenants who've been hurt by the recession are asking landlords for lower rents.

Some buildings that are vacant now—even some new ones—are likely to stay empty for a while, he says.

"Now, in this market, people need to have prelease agreements down before they develop retail space," he adds.

Scot Auble, president of the Spokane appraisal firm Auble, Jolicoeur & Gentry, says demand for office space has held its own here—so far.

"I haven't seen it fall off, but I can't expect it to get better," Auble says.

Because of the poor national economy, he expects rents to be flat.

"It depends how long the recession lasts," Auble says. "If it's a long recession, rents are going to go down."

Industrial space, meanwhile, has been leasing well, but as in other sectors, anything that becomes vacant might be more difficult to lease in 2009 than in earlier years, he says.

Apartments also tend to lease well in a recession, Auble says.

"If you can't get financing to buy a house, you've got to live somewhere," he says.