If you've been wondering when the housing market will turn around, Moody's Economy.com says it has the answer -- 2009 -- provided market conditions cooperate.

The report, "Aftershock: Housing in the Wake of the Mortgage Meltdown", forecasts the beginning of the end to housing market woes early next year, but only with the alignment of significant housing market conditions.

Economy.com's report says to generate the turnaround, homebuilders must further curtail housing starts, sellers must shave more off asking prices and lenders will have to loosen their purse strings.

To put the housing market on the road to recovery, new homes constructed must fall to 1 million this year, down from the estimated 1.2 million last year. Overbuilding has gotten some of the blame for the housing market slowdown.

The report says the national median home price will have to tumble 12 percent compared to peak prices. Prices have already fallen 5 percent from their high point, according to the "Aftershock" report which incorporates the respected Case-Shiller Home Price Index, a measure of home price appreciation.

Real estate agents say many home sellers are still stuck on "boom" and unable to recognize market pressures signaling them to lower listing prices.

Along with a smaller inventory of homes and lower home prices, a market turnaround will also depend upon more loan modifications to help stop foreclosures from flooding the already oversupplied market.

Creditors must also ease their grip on financing so more consumers can buy homes.

Creditors tightened money supplies after many subprime and non-traditional mortgages defaulted causing turmoil not only in the lending sector but for mortgage-backed securities as well.

"Aftershock" also reports federal policymaking already offers a promising outlook for a 2009 housing market recovery. The Bush Administration, legislators and regulators are fully engaged in heading off the recessionary impact of the hard-pressed mortgage market, according to the study.

The Federal Reserve has lowered interest rates, Congress recently passed and the president signed the "Mortgage Forgiveness Debt Relief Act of 2007," and lawmakers have several more major pieces of legislation in the pipeline to assist homeowner.

"The most significant upside risk to the housing outlook is that policymakers appear fully engaged in stanching the financial turmoil and ensuring that the economy avoids recession," the report concludes.

Published: January 8, 2008

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.