Housing, like any other "toxic" assets, needs to go through a cleansing process. That means down, before up.

And this is going to require liquidating the debt as we cannot continue carrying all that excessive baggage forever. The empty promises, artificially inflated numbers and ongoing uncontrolled bailouts have got to stop. We just can't save everyone that bought a house who shouldn't have. If some people were greedy, lazy or stupid - sorry - they should loose their house and not be rewarded by someone else making the payments. At the same time we are not going get housing back on track we if don't create jobs. People without work are unstable and live in uncertainty. 

Fixing the problem and coming up with a viable, effective, nationwide plan is of course difficult and I do not claim to be an economist or an expert (I track real estate business trends - that's all - for my free monthly enewsletter visit www.RETrends.com). That said let me provide my two cents on the economy:

1. As we have probably reached the lowest point in the housing market, or are within months of reaching it, we need to focus our efforts on short term incentives to regain overall optimism in real estate as a solid investment again if we hope to re-energize buyers into returning to the marketplace.

2. We need to halt foreclosures as far as reasonably possible. Banks need to allow people to extend the amortization of their home loans over a longer period of time; maybe even to 40 years if the situation dictates it. We have got to stop this negative wave that is cycling through the housing industry.

3. Government has to enhance the initial Home Buyers Tax Credit by extending it to ALL homebuyers, not just first-time home buyers. Furthermore, eliminate the recapture of the tax credit for 2008 and provide a true tax benefit across the board. 

4. I am not sure as to how we would implement this but what if all service providers involved in the transaction would provide a rebate of 20% on the fees associated with the purchase of a home for the next year. This would include title companies, mortgage companies, escrow companies, attorneys, etc., and yes, even real estate professionals.

5. Finally wouldn't it be great if we could lock mortgage rates for all home purchases at 4% for an extended period of time; 12 to 18 months? That would really be a boost.

In summary, let's get back to the solid model that worked before: 20% down, documented income, good credit and accurate valuations. Real estate has also been a great investment and on the long term will be again so there is no need for us to create unnatural bubbles. Let's not repeat what happened during the last decade.

Does this resolve all problems? Of course not, but it would certainly revitalize and restore our faith in housing and get buyers off the sideline in significant numbers.  And that's really what we need most in fixing the housing downturn - home buyers with confidence in real estate.

I am sure we each have our own opinion regarding what needs to happen. Love to hear thoughts.