I believe we will continue to see downward pricing pressure on the Potomac real estate market in the $900K+ price range through at least 2009. Take a look at the following article and scroll down to the stats for Potomac. You'll see that the Potomac market is quite solid up to $900K. Above that, we're still seeing declining transaction volume. http://mocorealestate.com/2009/02/08/montgomery-county-homeb
Here's my take on Potomac. Home prices in the $1M+ market are all over the place. Many sellers don't fully understand that prices must come down given the scarcity of buyers willing -- or able -- to make a purchase in this range. As a result, many homes are stubbornly over-priced. Having said that, there are still opportunities, but it can be hard work making a deal happen. A buyer is well-served by being very selective to find *the right* home, and to have the patience to buy at the right price.
I believe that longer-term trends are outstanding here. Except for in-fill developments and custom projects, we won't see the area flooded with a lot of new inventory -- ever. With a stable and limited supply of housing, and a fantastic close-in location, homes here will always be in demand. The challenge in this market is to buy at the right price.
How do you know it's the right price? You get educated by looking at homes in person and correlating this hands-on experience with a detailed understanding of home sales statistics. If you are qualified, have at least a 5 year horizon, it's a great time to get acquire a great home in this area.
Let me know if I can provide any help with your search.