It is becoming more apparent that the U.S. housing market will not rebound simply based on lower mortgage rates. This puts the government in a tough position as they are going to be left with two choices allow the market to continue to fall until all of the bad loans have worked their way through the system (potentially 2-3 years from now) or offer a true stimulus package that will provide the necessary components to help the market. If the government offers a stimulus package it will need 3 key ingredients. Financial incentives for lenders to offer loan programs for lower qualified applicants (increase demand base), tax incentives for purchasing foreclosed homes, and a true strategy for dealing with home owners facing foreclsoure.

Mortgage rates continue to trend around six percent and the balance of the economy is still producing above expectations, but one is left to wonder how long this can last.