Are we somewhere near the "tipping point" for real estate, where an accumulation of positive economic and government policy developments starts moving housing toward higher sales and stabilized prices?

This week there are some strong signs that we just might be there.

Tops on the list: The massive stimulus bill signed into law by President Obama is certain to pull buyers into the market who otherwise would have stayed on the sidelines.

The new tax credit in the legislation goes up to $8,000 and is non-repayable -- unlike last year's ineffective credit program. It' s intended for "first time" purchasers, but under the program definition, you're a first timer as long as you haven't owned or co-owned a house during the previous three years.

You might have sold your long-time home in 2005 or early 2006, and haven't owned a house since, but you still qualify as a first timer for the $8,000 credit this year.

Most economists aren't sure just how many additional home sales the credit will stimulate, but even Mark Zandi of Moody's Economy.com says the "credit is a plus for the housing market." Brian Bethune, an economist with IHS Global Insight, says the $8,000 credit will not only push large numbers of consumers to buy homes, but will also "buffer the rate of decline in home prices" by creating more demand.

A second major government initiative announced last week should also be helpful: The Obama administration's massive $275 billion relief program to keep three to four million home owners out of foreclosure, and to refinance three to four million mortgages where owners can't otherwise qualify for a new loan because of property value declines.

The giant assistance program has its critics, who say it will reward people who bought pricier homes than they could really afford. But that's not the point here: The fact is that, costly though it may be, the program could prevent foreclosures and price declines in neighborhoods across the country.

Still another positive sign: Home buyers and owners are beating a wide path to their mortgage lenders not only to refinance but to take out new loans to buy houses. Total applications for new mortgages last week exploded -- up by an extraordinary 48 percent, according to the Mortgage Bankers Association. Applications for conventional loans to buy houses were up by 11 percent.

Part of the reason was that rates fell again -- this time to an average of just 4.99 percent for 30 year fixed rates and 4.7 percent for fixed rate 15 year loans.

The opportunities here are pretty tempting ... and it looks like buyers are getting the message.

Published: February 24, 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, consumer 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.