After the market took a downward turn late in summer 2005, experts claimed the real estate bubble had burst. As the market continued to decline in 2006, many sellers were feeling pricing pinches. By mid-2007, buyers were sitting on the fence in a trance-like state, wondering whether it was a good time to buy and whether they could time the real estate market.

Where will 2009 take us? Based on my study of real estate facts and trends from 2008, here are my professional home buying and selling predictions for next year.

1) Home Prices Will Decline and Flatten

Median home prices will continue to fall in softened markets. They won't take a nose dive; though, they will float, ever-so-gently like a feather, slipping left to right, then left again, and closer and closer to a landing spot.

Interest rates on 3-year and 5-year ARMs will begin adjusting, and those who pay interest on Option ARMS, including many buyers who used 100% financing in 2005, will begin to lose their homes. Many banks will refuse to negotiate short sales, paving the way for a flood of bank-owned properties to hit the market.

3) Interest Rates Will Stabilize

Rates will move forward and backward within one-quarter point, and buyers will gravitate toward fixed-rate mortgages. Buyers who cannot qualify for conventional loans will lean toward seller-financed instruments such as land contracts or lease option purchases.

4) More Investors Will Enter the Market

Because investors use different criteria than traditional home buyers, investors will return to the market as they begin to recognize that a buyer's market is an excellent time to purchase real estate. First-time home buyers will find themselves competing with all-cash investors, and the investors will win.

5) Related Businesses Will Close Doors

Mortgage companies, appraisers, real estate agents, builders, construction-related industries, title companies and escrow companies will either close doors or consolidate to compensate for the slowing real estate markets of 2006 and 2007. Those that do survive the slowdown will reduce staff.

6) Buyers Will Write Lowball Offers

Novice buyers will read newspaper headlines, figure out it is a buyer's market and write lowball offers hand over fist. Some buyers won't even look at homes before writing insultingly low offers. Sellers should expect to receive an abnormal number of out-of-whack offers from buyers who will throw lowballs at a wall to see if something sticks.

7) Advertising Will Move Online

As newspaper advertising and readership continues to decline, agents will question whether their home advertising dollars are better spent elsewhere. Print advertising will lose its effectiveness. If postal rates continue to increase, agents will stop using direct mail campaigns and instead post Internet listings for better results and low-cost marketing strategies.

8) Inventory Will Increase Before Sharply Dropping

As the New Year rolls around, sellers whose listings expired in 2007 will put their homes back on the market as a new listing. Nobody will be fooled. Inventory will continue to climb until mid-summer, at which point sellers will begin to realize they must either remove their home from the market or be reasonable. Most will choose to remove their homes from active status and inventory will begin to fall.

9) REOs Will Refuse to Pay Some Closing Costs

Banks are sick and tired of taking it in the shorts. First, agents tried to cram short sales down their throats, and then banks were doubly disappointed when no one bid at the trustee's sales, leaving them stuck with unwanted inventory. Banks will demand bulk discount rates from title and escrow companies. Banks will also stop paying some ordinary closing costs such as city taxes and state documentary transfer tax.

10) Flood Insurance Rates Will Escalate

New assessments of flood risk may lead the federal government to redraw flood maps, possibly requiring more property owners to carry flood insurance or increasing costs. Home owners with preferred risk flood insurance policies could see rates double, while those who have no flood insurance could face paying rates that are 10 times higher than they would have paid under the old risk maps.