The past year will be remembered as one of the most eventful years in economic history our country has seen in many decades. Scandals and financial crises dominated the headlines. Not a month passed without news about something "crashing", corporate or government "back-room deals", and emergency bailouts to fix problems that many consumers had been unaware of.

Did this affect real estate? You bet it did. Did it create challenges for real estate agents? Yes. Did it confuse buyers and sellers? Absolutely!

Let's take a closer look at what happened in 2008:

JANUARY – Stock market volatility

January was a very volatile month in terms of the world's stock markets. Non-U.S. market prices saw a sharp decrease on Monday, January 21, 2008 and, for some markets, this continued on January 22nd. January 21st came to be called "Black Monday," and the activities of that day were referred to a "global shares crash".

Our American stock markets were closed on January 21st in celebration of Martin Luther King Jr. Day. In response to the fall in non-U.S. markets, the U.S. Federal Reserve announced a surprise rate cut of 0.75% at 8 a.m. Tuesday the 21st in an effort to prevent large declines in the American stock markets.

FEBRUARY – NAR announces 2007 numbers

The National Association of Realtors (NAR) announced that in 2007, existing homes sales experienced their largest drop in 25 years. "It's the first price decline in many, many years and possibly going back to the Great Depression," said the group's chief economist, Lawrence Yun. This news further fueled the growing concern felt by home buyers and sellers.

MARCH – Real estate fraud

In a move that stunned many in the industry, 406 people across the United States were arrested for mortgage fraud as part of a comprehensive sting carried out by the FBI. Those arrested included buyers, sellers and mortgage lenders.

APRIL – Foreclosures / builders in trouble / inventory up / buyers disappear

The troubles continued in April, with media coverage of high foreclosure rates. Builders began reporting difficulties in selling their existing new home inventory. Standing housing inventory (both for new and pre-owned homes) increased across the country. As a result of all of these factors, as well as the events that occurred earlier in the year, consumer confidence continues to erode, and fewer buyers make offers on homes.

MAY – Department of Justice settles with NAR

On May 27th, the Department of Justice and NAR reached a long-awaited settlement regarding NAR's multiple listing policy and how it pertained to the display of listings from the MLS on brokers' virtual office Web sites (or VOWs). The settlement brought a measure of calm back into the real estate markets.

JUNE – Government and corporate scandals

Senate Banking Committee Chairman Christopher Dodd proposed a housing bailout to assist troubled subprime mortgage lenders, including Countrywide Mortgage. Dodd admitted that he received special treatment and campaign donations from Countrywide in the form of a $75,000 reduction in mortgage payments".

The Chairman of the Senate Finance Committee and the head of Fannie Mae also received mortgages on favorable terms due to their association with Countrywide CEO Angelo R. Mozilo.

Former Bear-Stearns fund managers were arrested by the FBI for their allegedly fraudulent role in the subprime mortgage collapse. The managers purportedly misrepresented the fiscal health of their funds to investors publicly -- while privately withdrawing their own money.

JULY – Banks in trouble

Indymac Bank, a subsidiary of Indymac (the Independent National Mortgage Corporation, is placed into the receivership of the FDIC. Indymac's failure was the fourth largest bank failure in US history. IndyMac Bank was the largest savings and loan association in the Los Angeles area, and the seventh largest mortgage originator in the US.

AUGUST- Real Estate Recovery

In August, a measure of consumer confidence was beginning to return to the market, as buyers and sellers felt we had weathered the storm. Pending numbers began to increase, as inventory was absorbed.

SEPTEMBER – Financial crises

The improvements that began in August came to an abrupt halt as a number of dire financial crises struck the economic markets. Among these:

• Federal takeover of Fannie Mae and Freddie Mac. These two organizations owned or guaranteed about half of the $12 trillion mortgage market.

• Merrill Lynch is sold to Bank of America amidst fears of a liquidity crisis.

• Lehman Brothers files for bankruptcy protection.

• The US Federal Reserve loans $85 billion to American International Group (AIG) to help AIG avoid bankruptcy.

• Secretary of the Treasury Henry Paulson's financial rescue plan is unveiled after a volatile week in stock and debt markets.

• It becomes known that the Federal Bureau of Investigation is looking into the possibility of fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer AIG, bringing the number to 26 of corporate lenders under investigation.

• Washington Mutual is seized by the Federal Deposit Insurance Corporation amidst fears of a run on the bank. Its banking assets were sold to JP Morgan Chase for $1.9 billion.

• The Emergency Economic Stabilization Act is defeated by a vote of 228 to 205 in the United States House of Representatives.

OCTOBER – Government "bail out"

In an effort to bring stability and normalcy to the economy, action was taken on several fronts:

• The U.S. Senate passes their version of the $700 billion bailout bill.

• The Emergency Economic Stabilization Act of 2008 is proposed, commonly referred to as a bailout of the U.S. financial system. The Act authorizes the US Secretary of the Treasury to allocate up to $700 billion to purchase distressed assets (especially mortgage backed securities), and to make capital infusions into banks.

• President George W. Bush signs into law the Emergency Economic Stabilization Act.

Unfortunately, in spite of the approved bailout – or, some think, because of it – the stock market experiences its worst week of performance in 75 years.

NOVEMBER – World economies meet / NAR makes recommendations to Congress

A group of twenty of the world's largest economies meets in Washington DC, and releases a summary of the meeting. Although no detailed plans were agreed upon, the group listed immediate and medium term action plans for each of the following five principles:

1. Strengthening transparency and accountability

2. Improving regulation

3. Promoting market integrity

4. Reinforcing cooperation, and

5. Reforming international institutions

At long last, the government turns to the National Association of Realtors for their input on the housing / economic crises. NAR's urges Congress to include the following provisions in any future legislation relative to housing:

• Make the $7,500 tax credit available to all purchasers, and eliminate the repayment requirement. The credit's limited availability and required repayment terms have severely limited its appeal to potential homebuyers. As a result, the credit has not been effective at stimulating home sales.

• Make the increased 2008 FHA, Fannie Mae, and Freddie Mac loan limits permanent. The rules for 2009 will significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.

• Get the emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don't just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.

• Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

DECEMBER - Mortgage applications are up / interest rates are down

By the second week of December mortgage applications were way up, as a result of the decrease in interest rates. Applications from borrowers using conventional loans were up 37% from the same time a year earlier as well as the percentage for borrowers using FHA financing was up by 39%.

Mortgage rates were at their lowest rates in over four years! The 30-year fixed rates were at 5.47% in December, versus 5.40% in March of 2004. And 15-year rate fixed loans were as low as 5.13%. As a point of comparison, in December of 2007, the interest rate was at 6.11%.

As we wrap up 2008, there is no doubt that we've been tumbled and tossed around by events and drama. But like I've always said, real estate will survive -- and thrive! Real estate isn't going anywhere. Property ownership is the cornerstone of a free country. People need a place to live -- and always will.

Prices go up. Prices come down. But demand, on some level, will always be there.

Moving forward into 2009 it is clear that 2009 will need to be a year of restoration and stability. While we will see adjustments in 2009, it's sure to be a much better year than 2008.