What will the new year bring for housing and real estate? It's easy to look at all the negative economic news in the headlines and say - there's no sign that 2009 is going to be any better than 2008.

But here's a different perspective to consider from one of the country's veteran financial analysts -- Richard Bove of Ladenburg Thalmann, the investment banking company.

In a research report issued late in December, Bove said he sees a positive dynamic taking shape in the current cycle. The government has intervened aggressively in the markets to push interest rates down -- most notably in the home mortgage sector.

Though it takes awhile for low-cost money to begin having its effect, Bove said he expects “housing prices to stabilize and/or rise (in 2009) after a likely boom in mortgage refinancings as rates fall and loan applications increase.”

Add in the expected massive economic stimulus package being put together on Capitol Hill with the incoming Obama administration -- and there's a good chance we're going to see a gradual transformation of the downward cycle into a slow rebound over the coming several quarters.

Already there are positive signs of the turnaround Bove predicts:

• Mortgage applications are off the charts, mainly for refis but also to buy houses at affordable prices.

• Rates continue to hover at 50-year lows - five percent and even four and three quarters percent for 30-year mortgages, and still lower for 15 and 20 year mortgage terms.

• Plus we're all paying a lot less at the gas pump, and sharply discounted prices for retail goods and autos.

• And guess what? Americans are actually SAVING again, the national savings rate took a nearly three percent jump last month. That might sound small, but it's hugely important if it is the start of a trend.

There are also some signs that housing prices are stabilizing in some parts of the country. The latest monthly Federal Housing Finance Agency index found home prices UP by six-tenths of a percent in the Mountain states and UP by two tenths of a percent in New England.

You can ridicule small regional gains as statistically irrelevant, but here's Realty Times's economic proposal to you for the New Year: Keep your eyes open for the small positive signs that are accumulating out there … because all downcycles tail off and come to an end.

We think the smartest players in real estate -- consumers and the industry - will make the most of the positives -- low-cost money, low prices, stabilizing local markets -- and thrive in the new year.

Published: January 6, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.