Wednesday, October 7, 2009
By Barry Lotz,J.D.,Ph.D. www.luxurydeserthomes.com
This is the perfect storm for home buyers!
Our summer is officially over and we are getting ready for our 2010 season here in the Palm Desert. The temperatures are in the comfortable high 80’s and the golf courses are being prepped and seeded for our new season and the majority of courses should be open between November 5-10.
A recap of last month sales here in the desert!
The summer of 2009 was one of the best summers I have seen so far in the last 3 years. Of the total sales, 866 were recorded in the Coachella Valley — up 12 percent over September 2008, and slightly up from August of this year.
The median home price paid for a Coachella Valley home or condo was $178,000 in August, slightly down 1.5 percent from July.
Now, in a few local areas like Bermuda Dunes, La Quinta, Palm Desert and one section of Palm Springs — recorded sales that resulted in median home prices in the $200,000 to $275,000 range.
We have seen a small increase of sales in the luxury home market in September versus the same month in 2008. Luxury home sales aren't easy to snare in these times, but they are happening.
Residential inventory in the desert area is down to just over 5,000 units. Take the current housing inventory and divide by the 866 closed sales for August resulting in an inventory of just 6 months…. a number that most would suggest we are reaching a neutral market.
Bank Owned Homes and Short Sales still makes up for the majority of sales here in the desert with the majority of homes being sold for under $500,000.00
It’s the perfect storm for home buyers. Deep discounts on properties, historic low interest rates and great tax incentives are driving home buyers to snap up these great opportunities both for investment and personal use.
To receive a complete list of Bank Owned Homes here in the desert visit: http://www.luxurydeserthomes.com
We are also observing the following:
• An increase of appraisals from banks for distressed homes over 4,000 sq. ft.• Interest rates will stay where they are through next year• Unless extended by Congress, this is the final month to take advantage of the first-time home buyer $8,000 Tax- Credit.• The highest-priced property out of the 866 sales sold $2.2 million. • The Canadian dollar is still very strong. (1 Canadian dollar = 0.93 U.S. dollars)
There are still deals to be made! Don’t miss the opportunity this time!
Please call or e-mail me with any questions .
Barry

Pending U.S. home sales rose in June for the fifth straight month, another encouraging sign of life for the embattled U.S. housing market, the National Association of Realtors reported Tuesday.
For June, the Realtors group said its pending home sales index rose 3.6 percent to 94.6, from an upwardly revised reading of 91.3 in May. The last time there were five consecutive monthly gains was July 2003.
The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2.
The report tracks signed contracts to purchase previously owned homes and is considered a barometer for future home sales. Typically there is a one- to two- month lag between a sales contract and a completed deal.
The jump in pending home sales coincides with other positive trends in the residential real estate market.
"The housing market is healing and the patient is getting healthier at an accelerating pace," said economist Joel L. Naroff, president of Naroff Economic Advisors Inc.
For the first time in five years, home resales have risen for three months in a row, increasing almost 4 percent in June. Low prices, attractive mortgage rates and a first-time homebuyers tax credit of up to $8,000 have kick-started sales.
"Because housing is so affordable in today's market, job security and the first-time buyer tax credit are bigger factors in influencing home sales," said Lawrence Yun, the Realtors group's chief economist, in a statement.
Also Tuesday, homebuilder D.R. Horton Inc. said its fiscal third-quarter losses shrank from the year-ago period, as it took smaller charges against the falling values of its land and unsold homes.
D.R. Horton's results followed similar numbers from Pulte Homes Inc. and Centex Corp., which reported quarterly earnings Monday that showed new-home orders picked up during the first half of the year.
Yun said he expects existing home sales to gradually rise over the balance of the year, with conditions varying around the country.
"It appears home sales are on a sounder footing and inventory is gradually being absorbed," he said.
Regionally, the pending home sales index jumped 7.1 percent to 100.7 in the South and 2.9 percent to 100.4 in the West. The index inched up 0.4 percent to 81.2 in the Northeast, and up 0.8 percent to 89.9 in the Midwest.

It was — note the past tense — the worst housing recession anyone but survivors of the Great Depression can remember.

From the frenzied peak of the real estate boom in 2005-2006 to the recession's trough earlier this year, home resales fell 38 percent and sales of new homes tumbled 76 percent. Construction of homes and apartments skidded 79 percent. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.

A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath and exhale. The worst is over.

For years Las Vegas symbolized the boom, as mile after mile of desert gave way to three-bedroom homes and swimming pools. Then came the crash and it symbolized something else: a decade of speculation and excess.

Now, Las Vegas is one of the hottest housing markets in the region again. This city has always profited from others' misfortune, and the same can be said of the current housing market.

In Clark County, Nev., home to Sin City, one in every 11 homes had received at least one foreclosure-related notice in June, according to RealtyTrac. The glut of deeply discounted foreclosures has almost doubled sales activity for most of this year.

"In January the market was busy, and since that time, it's gone a little haywire," says Brad Snyder, an agent with ZipRealty in Las Vegas. "There's (sales) activity now that we haven't seen even since '04."

The situation is similar in California's Riverside, San Joaquin and San Bernardino counties, where one out of every 14 homes was in foreclosure.

After falling 18 percent in the second half of 2008, monthly home prices were flat in the first half of this year, on a seasonally adjusted basis, according to the National Association of Realtors.

Markets like these have seen a surge this year in all-cash buyers, many of them investors, scooping up the sharply discounted properties. It's not uncommon to see multiple offers on a single property, and that's helped slow the rate of price declines a little. The demand also has helped whittle down the inventory of homes for sale to the lowest level since the boom.

"We have seen such a steep decline in supply right now, that when a home comes on the market it's first day there could be seven or eight or 10 people there in a matter of hours," Snyder says.

To lure buyers away from foreclosures, homebuilders have slashed prices or are simply tearing down vacant homes. New home sales jumped almost 59 percent in the first half of the year, while construction in these grossly overbuilt markets slid 12 percent.

By ADRIAN SAINZ, DAVID TWIDDY, DANIEL WAGNER, ALEX VEIGA, Associated Press Writers

Just today the pending home sales show a sustained uptrend, rising for the fourth month in a row, from our very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the National Association of Realtors®.

The Pending Home Sales Index based on contracts signed in May, increased 0.1 percent from an upwardly revised reading in April, and is 6.7 percent higher than May 2008. The last time there were four consecutive monthly gains was in October 2004. Wow, this market is really heating up. And if you haven't already jumped in to get your deals, you need to do that NOW.

Regional Breakdown:
Northeast rose 3.1 percent May over April and is 6.8 percent above May 2008.
Midwest slipped 1.3 percent May over April, but is 11.4 percent above May 2008.
South declined 1.7 percent May over April, but is 7.9 percent higher than May 2008.
West rose 2.2 percent May over Apri, and is 0.7 percent above May 2008.
NAR’s Housing Affordability Index remains at historic highs. The affordability index fell to 171.6 in May from an upwardly revised 178.8 in April, which was the highest on record dating back to 1970. “Under these conditions the typical family would devote only 14.6 percent of gross income to mortgage principal and interest, which is one of the lowest percentages on record,” Yun said.
A median-income family, earning $60,800, could afford a home costing $296,700 in May with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of what a median-income family can afford. The affordable price was significantly higher than the median existing single-family home price in May, which was $172,900.

The first-time buyer tax credit also is benefiting the market. “Strong activity by entry level buyers is helping to absorb inventory and allow some existing owners to make a trade,” Yun said.

Pending home sales is a forward looking report. Therefore you should see existing-home sales continue to trend up through the rest of the year. Even with all the new foreclosures hitting the market, with builders not building, supply is shrinking. In some parts of the country, like California, housing supply is less than a 4 month supply.
La Quinta, Palm desert and Rancho Mirage have wonderful opportunities. Homes can be bought from $56 per square foot!!!!
I know I am buying and you are invited to become involved in the investment aspect of single family homes. Visit www.financeweb.com to see what I am planning.

Finding the right contact or the right information can mean the difference between the success or failure of a business, product or service. Networking is invaluable, and so is relevant information that might prompt you to see a challenge in new light or find a new approach that you had overlooked before.

I hope you benefit from the resources. Please check back from time to time because I will be updating information as people request and as I'm inspired by topics that are relevant in this challenging times.

Web Resources and Blogs for Entrepreneurs:

* Inc.
* Wall Street Journal – small business financing
* Guy Kawasaki’s blog
* VentureVoice podcasts
* Vador.tv Voice of the Entrepreneur
* Yahoo! Small Business

Market Research:

* http://www.google.com/insights/search
* http://www.google.com/trends

For Golfers:

* Become a Golf Teacher www.pgtaa.com

* Golf News on Equipment and Travel www.connoisseurgolfandtravelreport.com

* Palm Springs Top Ten Golf Courses www.luxurydeserthomes.com/downloads/PStoptenflyer_Layout-1.pdf

Research what funding your competitors/friends/enemies got:

* TradeVibes
* PE Week News
* Venture Wire

Books:
Reality Check – see the chapters on “The Lies VCs Tell” and “The Lies CEOs Tell”– by Guy Kawasaki

Articles:

* Angel Investing 2009
* Top Ten Legal Mistakes Made by Entrepreneurs

Prices Are Generally Falling, But a Few Markets Have Shortages of Midpriced Homes

Falling home prices are starting to ignite bidding wars in a few parts of the U.S. as first-time buyers compete with investors for the same foreclosed properties.
In most of the nation, the supply of unsold homes continues to swamp demand. Home prices in many markets continue to fall, and foreclosures, which slowed in late 2008 as mortgage companies delayed taking action against delinquent borrowers, are picking up again.
But real-estate brokers say multiple offers on certain homes have recently become more common in parts of California and Arizona and the Washington, D.C., and Minneapolis-St. Paul metropolitan areas.
Where Housing Is Headed
See changes in the housing markets in 28 major metro areas.

Early Signs of a Turnaround?
Some home buyers are bidding against each other on foreclosures:
The action is confined to certain markets, including parts of California, Arizona and the Washington, D.C., and Minneapolis-St. Paul metro areas.
Many markets, including South Florida and New York City, remain glutted.
The supply of bank-owned homes is expected to grow over the next few months.
MORE
Homeowners Refinance in Droves
Real Time Econ: Why Some Home Prices Are Up
Tamby Leonard of Santa Ana, Calif., southeast of Los Angeles, says she has been outbid four times since January when trying to buy a home for her family of five. The more appealing bank-owned homes in her price range, around $300,000, tend to be sold quickly to investors who can pay cash. The market for homes in the Santa Ana area in that price range is "blazing hot," says Ed Mixon of Altera Real Estate, Ms. Leonard's agent.
On Wednesday, the Federal Housing Finance Agency reported that home prices nationwide rose a seasonally adjusted 0.7% in February from January, led by gains on the West Coast. When compared with a year earlier, however, home prices were down 6.5%.
Bidding wars -- common during the housing boom -- had all but disappeared soon after the market peaked about three years ago. Even now, they remain the exception rather than the rule.
The Wall Street Journal's quarterly survey of 28 major metro areas shows that there is still a glut of homes available in most markets. But the glut has shrunk, and some areas are running into shortages of moderately priced homes in middle-class neighborhoods.
Many housing economists expect the market to bottom out gradually over the next couple of years, with some parts of the country stabilizing well before others. California and Washington, D.C., for instance, are likely to recover faster than South Florida, which has an immense glut of vacant condominiums, and the New York City area, which has been hurt by Wall Street's collapse, says Kenneth Rosen, chairman of the Fisher Center for Real Estate at the University of California, Berkeley.
Across the nation, there is still a tug of war between bullish and bearish forces. On the bullish side, falling prices and the lowest mortgage rates since the 1950s have made homes far more affordable, luring shoppers like Ms. Leonard, who has been renting for years. Adding to the attraction, the U.S. government is offering tax credits for certain people who buy homes before Dec. 1. The credit -- equal to 10% of the purchase price, up to a maximum of $8,000 -- is available to buyers who haven't owned any other primary residence in the U.S. during the three years before the date of purchase.
On the bearish side, rising unemployment has knocked many people out of the housing market and made those who still have jobs skittish. Even those with secure jobs who want to buy can't always get loans on attractive terms because of today's tightened credit standards.
Associated Press
A foreclosure sign sits outside a home for sale in Phoenix.
In addition, the supply of bank-owned homes is expected to grow over the next few months because many mortgage companies have ended moratoriums during which they refrained from proceeding with foreclosures.
The moratoriums artificially reduced the supply of foreclosed homes listed for sale, says Chad Neel, president of LPS Asset Management Solutions Inc. in Westminster, Colo., which sells such properties for banks. Now "there's a flood about to come on the market," Mr. Neel says. Foreclosures are likely to weigh on the market for years as courts and mortgage companies struggle to catch up with huge backlogs of unresolved cases.
Foreclosures, though far above normal levels in most of the country, are heavily concentrated in a few states, including California, Arizona, Nevada, Florida and Michigan. In areas with large numbers of bank-owned homes, buyers are mainly concentrating on those properties. That leaves ordinary homes languishing as owners generally refuse to slash prices enough to compete with banks.
In the Sacramento, Calif., metro area, about two-thirds of all March sales were foreclosures, says Michael Lyon, chief executive of Lyon Real Estate. The supply of foreclosed homes currently listed for sale is enough to last only about a month at the recent sales pace, he calculates. But there are plenty of homes listed for sale that aren't bank-owned, enough to last more than eight months.
In West Sacramento, a buyer represented by Cherie Hunt of Prudential California Realty recently competed against two other bidders for a three-bedroom home built in 2001. Ms. Hunt's buyer won by agreeing to pay about $220,000, or nearly $10,000 above the asking price. But that's still way down from $405,000, the price at which the same home sold in 2005.
"I have 20 buyers looking desperately," says Ms. Hunt.
Frank Borges LLosa, owner of FranklyRealty.com, a real-estate brokerage in Arlington, Va., is advising clients that banks favor all-cash bids or offers from people who seem certain to qualify for financing. Sellers may well choose the offer least likely to fall through rather than the highest bid, he says. He and other brokers say banks appear to be deliberately setting asking prices low in some cases to provoke bidding battles.
"There are a lot of buyers who think they can lowball," says Connie Vaughn, an agent at ZipRealty in the Los Angeles area. But in some cases mortgage companies already have cut asking prices enough to generate multiple bids. One of her clients recently prevailed over more than 30 other bidders by offering about $86,000 -- or $20,000 above the asking price -- for a four-bedroom house in Adelanto, Calif., that had sold for $200,000 in 2004.
A mortgage company recently slashed the asking price on a two-family home in Norwich, Conn., to $73,900 from $144,900. That price cut prompted five offers that the company is now considering, says Linda Davis of Re/Max Realty Group, the listing agent. She says the price cut was unusually steep but adds, "At some point, [banks] just decide to let it go."
That's encouraging, says Ronald Peltier, chief executive of HomeServices of America Inc. in Minneapolis, which owns real-estate brokerages in 19 states. "We do need to flush out the distressed inventory," he says, before the rest of the market can stabilize.
One positive trend is affordability. A family earning the national median pretax income of $52,800 a year needs to spend 25% of that income to buy a median-priced home, down from 44% in mid-2006, according to John Burns, a real-estate consultant in Irvine, Calif. For the Los Angeles metro area, that ratio has dropped to 45% from 102%. In Phoenix, it is down to 19% from 46%.
Among the markets Mr. Burns expects to recover earliest are the metro areas of Washington, D.C.; San Antonio; Raleigh, N.C.; Denver; Sacramento; and San Diego.
By James R. Hagerty at bob.hagerty@wsj.comPrinted in The Wall Street Journal, page B9

For some small business owners, trouble on the home front (as in home mortgage front) threatens already precarious business conditions. Home mortgages that once seemed a good source of money for the business now could result in the need to layoff workers or even close. Homeowners with trouble making mortgage payments often hear that their best bet is to contact their lender about a loan modification, but they should be well prepared when they do so.

Whether the problem making mortgage payments is short term or long term, the best option for homeowners often is to contact their lender to try to work out a new payment agreement. Lenders are not obligated to make mortgage modifications, however it is often in their interest to work out a feasible payment plan for the homeowner rather than foreclose and sell the property.
The Obama Administration’s Homeowner Affordability and Stability Plan included refinancing of qualifying mortgages owned or securitized by Fannie Mae or Freddie Mac to a lower fixed interest rate. As reported by the Washington Post, the Obama Administration announced that the program will apply to previously excluded second mortgages.

In part to help those outside this program, the Obama plan also included $75 billion in matching cash to encourage lenders to agree to mortgage modifications.

Here are a few tips to keep in mind when seeking a mortgage loan modification:
1. Don’t fall for any mortgage modification scams (such as advanced fee scams).
2. To learn how to best make your case for a loan modification, contact one of the HUD Approved Foreclosure Avoidance Counselors in your area. They can also inform you about any federal, state or local programs that may assist you.
3. Get an accurate picture of your finances. Your best chance at getting a modification is to demonstrate the ability to repay and a thorough understanding of the costs and income you face going forward.
4. If the problem making payments is short-term, ask your lender about forbearance or postponement of payments for a limited period. Be prepared to demonstrate when you’ll be able to start making payments again.
5. If the problem is long term, and what you need is modification, be prepared to make an offer and demonstrate how you could repay the modified loan. Be sure your lender is up to speed on incentive programs that may be available to help.
6. When negotiating a modification, make sure to understand how it will deal with any fees or penalties that may have accrued. Know what fees are in play and whether the modification will eliminate, reduce or tack them on for repayment.
7. If the lender won’t modify and foreclosure looms, consider asking the creditor to “produce the note,” (particularly when a creditor other than the original lender seeks foreclosure). It’s a stalling tactic, but can sometimes encourage creditors to negotiate.
For more information, visit www.findlaw.com.

Written by Caleb Groos

"In the last few months you've seen a real pickup in activity although at much lower prices," Mr. Buffett said, citing data from Berkshire's real-estate brokerage business, HomeServices of America Inc., which is one of the largest in the U.S.

In California, medium and lower-price homes -- under $750,000 -- have been selling more, though there hasn't been a bounce back in sale prices, Mr. Buffett said. "We see something close to stability at these much-reduced prices in the medium to lower part of the market."

These remarks are from Berkshire Hathaway Inc. shareholder meeting this past weekend.
Copyrighted, Dow Jones & Company, Inc. All rights reserved.

Please visit: http://www.youtube.com/watch?v=ZiH3pfYcRrs

I would love to hear your comments and suggestions.

When down markets end, almost all investors regret not buying during the hard times. Too many investors want to wait until they are sure values won’t fall any more. But by that time, they probably have climbed back up. Then everybody wants back in, and the bargain goes away like a wet spot on a blackboard. Timing markets is impossible. What you need to do is buy when the numbers are good enough, not try to time it perfectly such that the numbers won’t get any better. In some markets today, the numbers are good enough regardless of whether they will get even better in those markets in the future.

April/ May Upcoming Events
Stagecoach Festival, April 25 - 26
10th Annual Golf Classic, April 27
"Joe & Mustard" April 27
Annual Elvis Honeymoon Weekend May 1 - 3
Cops and Kids 13th Annual Charity Golf Tournament May 3
"Ted Herman and his Orchestra" 1st and 3rd Tuesday in May
.David Copperfield May 12 - 14
Smooth Jazz Festival May 16
"Salute to America" May 21
"My Name is Eartha But You Can Call Me Miss Kitty" May 23
Palm Springs Film Noir Festival May 28 - 31
"A Mystic Weekend" May 29 - 30
Palm Springs Restaurant Week May 31 - June 9
Annoucement:Indian Wells Theater Announces Exciting New Upcoming Season

April 15, 2009

Entry-level sales take off
Sales of property priced under $500,000 double in Coachella Valley
Debra Gruszecki • The Desert Sun as of March 15
Sales of entry-level homes dominated the Coachella Valley real estate scene during the fourth quarter of 2008, while big-ticket properties turned in a disappointing performance, new data shows. "It's almost like the original tale of two markets,” said Patrick Veling, president and founder of Brea-based Real Data Strategies, which provides and analyzes real estate data for The Desert Sun.

“Except, it's flipped: Entry-level home sales are robust” with a 58 percent gain over 2007. “High-priced real estate sales took it on the chin.”

The company has tracked real estate trends across the nation for more than 16 years and provides data to The Desert Sun for a comprehensive look at the Multiple Listing Service market. It made its observations from the 1,867 sales tracked in the last three months of 2008:

Sales of property priced under $500,000 doubled compared to the fourth quarter of 2007.
Real estate activity mushroomed in west Desert Hot Springs, where sales prices averaged $108,247.
Sales of mid-range homes dropped nearly 50 percent.
Sales in the market between $750,000 and $1million fell by one-third.
Homes priced above $1 million declined nearly 56 percent.
“I have never seen prices tumble so dramatically in such a short time,” Veling said. “There has never been such a clear indicator that price is driving this sales phenomenon.”

Greg Berkemer, executive director of the California Desert Association of Realtors in Palm Desert, has described the market as one that can be unfairly harsh and hugely rewarding at the same time.
“It depends on what line you happen to be standing in,” he said.

“The line for buyers is better now than the line for sellers. Even so, the non-serious buyer or seller should get out of line to allow those that need and want to sell or buy to meet.”




2009 Sales over $1,000,000 prepared by www.luxurydeserthomes.com
January - 13
February - 11
March - 24

Call for specific details as to where these occurred. Barry 760-574-7676

Buy a Home NOW or WAIT?

Saturday, March 21, 2009


This is really the million dollar question. Should I buy a house now, or should I wait and see if prices fall further?

But what if interest rates go up (per Bernanke's 60 Minutes interview March, ‘09) then where do I stand?

I did the math, and after listening to Ben Bernanke's interview on 60 minutes last week - it’s clear that if housing improves, interest rates will have to go up. And, what if prices drop, did I mess up and buy to early?

This chart REALLY shows the benefits of buying a home now versus waiting.



It’s rather interesting, yet what it does not take into account is when the market does pick up, and when rates do start to go up, there will be much more competition on homes, so the "price advantage" will be gone. (My current observation as one of the desert’s top Realtor, is the market IS picking up, in fact it’s picked up a lot in the last month based on reported sales to the MLS).

For more information or to find some homes that really make sense to buy now, with built in equity, give me a call.

Here are the five best reasons to be hopeful about housing in 2009:


1. Cheap mortgage rates: With inflationary pressures easing and economic concerns mounting, shell-shocked investors are seeking the protection of government securities, such as 10-year treasury notes, driving down yields. The lower yields, coupled with the Fed's recently announced plans to buy up debt and mortgage-backed securities from Fannie Mae and Freddie Mac have dragged mortgage rates to multi-year lows. Thirty-year, fixed mortgage rates hit an average of 5.47 percent last week, the lowest they've been since 2004, according to Freddie Mac.
To be sure, not everyone will be able to take advantage of these attractive rates: Tougher lending standards will prevent many would-be buyers from getting into the market, while homeowners whose houses are now worth less than what they owe on their mortgage won't be able to refinance. Still, the rates present a welcome incentive for qualified borrowers to step up to the plate. "Lower mortgage rates mean more people with those credentials will be able to qualify," says Patrick Newport, a U.S. economist at IHS Global Insight. While that might not make a dramatic impact on the market, it could be enough to keep home sales from declining as much as they otherwise would, Newport says.

2. Lower prices: Home prices at the national level have already fallen 21 percent from their 2006 peaks. And in certain bubble markets, the crash has been even steeper-prices have fallen more than 30 percent in Phoenix and Las Vegas over the past year alone. Although that's a big blow to homeowners-the housing bust is expected to wipe out more than $2 trillion in home values in 2008-lower prices do help stimulate buyer demand, which is badly needed to mop up the excess housing inventory. And while home prices are expected to drop further in 2009, values in certain markets are already at levels low enough to tempt bargain hunters. "Falling home prices aren't part of the problem, they are part of the solution," says Mike Larson, a real estate analyst at Weiss Research.

3. Fewer housing starts: In the face of dwindling demand, home builders have been forced to sharply pull back on new construction. The government reported Tuesday that November housing starts dropped to their lowest level since 1959, when officials started keeping the statistics. While that's bad news for the economy-because it means fewer jobs for builders and others-it's an important step in bringing housing supply back in line with demand. The cutback will limit the supply of new homes coming into the market, which helps to reduce the glut of unsold homes that is putting such downward pressure on housing prices. "In order to get rid of the inventory, builders have to cut back even further and prices have to drop," Newport says. "It's very painful, but there is no way to get around the fact that that's what you need to do to equilibrate the market."

4. Obama stimulus: In an attempt to hoist the economy out of its rut, President-elect Barack Obama has announced plans for a massive federal spending program. The initiative is expected to put between $500 billion and $1 trillion into infrastructure repair and other projects in an effort to keep Americans working. Should this program succeed in preventing unemployment from skyrocketing and keeping the economic contraction from hitting the dourest projections, certain housing markets may firm up quicker than expected, says Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School of Business. In the best-case scenario, "the housing market declines become contained to those markets where house price declines are significant," Wachter says.

5. Credit programs: It will be tough for the housing market to come back to life until the credit markets-which have been log-jammed by fear for more than a year-begin to unlock. Like the fight to limit unemployment, reviving the credit markets is a daunting challenge. But remember, the federal government has already taken a number of steps designed to do just that. The Federal Reserve has slashed its benchmark interest rate to between 0 and 0.25 percent and committed nearly $2 trillion to new lending programs, bailouts, and additional measures designed to bolster the financial markets. Meanwhile, Congress passed a $700 billion bailout and the Treasury has already injected a chunk of that money into banks of all sorts. While these efforts haven't been enough to restore the credit markets to health, they have produced results. Interbank lending, for example, has eased. And should this modest victory lead to a broader recovery in the credit markets, the economy-and the housing demand that comes with growth-could turn around quicker than expected. "Right now, panic is driving the credit markets," says Moody of Mission Residential. "If, for whatever reason, confidence were to resume and people's appetite for risk was starting to increase, then you could start all of a sudden seeing credit flowing much more freely, which obviously supports spending in both business and households."

By Luke Mullins, USNews.com