Recent news has provided hope that housing is near a bottom.

The economy still grew in March, although at a crawl. Housing inventories are at previous 1991 recession highs, while mortgage interest rates are four points lower today.

But there's a lot to fear in the news. Inventories could get worse if the credit crunch doesn't improve. The elimination of subprime loans is being exacerbated by the large point spread between conforming and jumbo loans of as much as two percent.

And the latest jobs report shows weakness in the labor market. In fact the first-time filings for unemployment claims are up. Further, increases in salaries were wiped out by higher costs of goods.

The nation is a deer in the headlights when it comes to fuel. We're spoiled to artificially low prices compared to the rest of the world which pays twice to three times per gallon than we pay in the U.S.

Despite warnings that it couldn't last, America continued to build gas guzzlers and provide subsidies for overweight vehicles, although most SUVs have never even seen a farm or ranch.

Now that prices are rising, Americans are fearful that their bubble is bursting. Consumer spending is up, but only because prices are up.

It will take their fear to cool inflation. And it will take their greed to move the housing market forward.

Sounds ugly, but it's true. The financial press has done such an excellent job of guilt-jerking car owners and scaring the wits out of homebuyers, it will take the bargains of a century to get them to buy homes and cars again. For example, California is reporting that home sales in March were 24 percent below the previous year. The new median home price is $413,980, a 29 percent decrease from last year's $582,930. Inventories are at an 11-month high.

The fact that sales are being restrained by the high cost of jumbo loans is obvious from the days on market - it took 53 days to sell a home in California a year ago. In March 2008, it takes only four more days to sell.

What that signals is demand is there, but it's being subverted despite the attraction of much lower housing prices. The bottleneck has to be in loans.

If mortgage interest rates rise, that will take more buyers out of the equation, frustrating sellers and raising inventories further.

The good news is -- loan rates could fall again. If inflation is cooled and the dollar gets the support it needs from the Federal Reserve, mortgage interest rates will come down again, says mortgage expert and author David Reed. "A lot has to happen, but rates could dip below 5.50 percent or lower over the next several weeks."

Published: May 2, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.