For at least a year or more, sellers of bricks and sticks properties and institutional investors holding paper on such assets were unwilling to accept that the massive deleveraging in the industry was anything but temporary, said Roy March, CEO and Eastdil Secured and moderator of the capital markets panel this morning. That, however, appears to be changing. "The market has gone through all the traditional stages of grieving," he said, to some laughter in the audience, "from grief to depression. We are now at the state of acceptance."

In some ways the need for investors to revalue assets has been harder to swallow here than, say, in New York, where the industry is in serious pain. The Washington real estate market has been relatively immune from the worst ravages of the national trends bringing other markets to their knees, making it harder for investors to realign their thinking.

Mark to market – a controversial concept in many quarters and a potential area of change in Congress – is one way to get to that point, the panelists said.

"There is no liquidity right now," Chris Kelly, managing director of Capital Source, said. "Hopefully, the programs that the government is introducing will have some impact. But we will have to take our medicine – and marking assets to market" is important.

Now it seems as though banks, financing companies and insurance companies are poised to do so, he said. "The lending community – and it pains me to say this because I am a lender – is going to have to take a long look at their assets."

"If we truly are at this state of acceptance, then assets will have to get marked down," added Robert Gigliotti, partner of Area Property Partners.