It may just seem like the sky is falling with Friday's failure and take over of Indy-Mac along with both Freddie-Mac and Fannie-Mae being on extremely thin ice.  Rumors of other institutions failing as well boded fairly negative news for the real estate and mortgage industry. Nothing seems to be helping the economy or home buyer confidence these days.  As we all know it is the banking industry and the financing of real estate and other business needs that is the core problem.  Even well qualified borrowers are facing extremely difficult underwriting and it  appears it is not going to get better until it gets worse.  No recovery will take place until the banking industry recovers, plain and simple.  The band-aids congress is contemplating on foreclosures do not address the liquidity issues that must be resolved.

Meanwhile, How you communicate with your clients and your spheres of influence will impact your image as an industry leader and not someone just being blown along with the headwinds.   Being positive is always a step in the right direction but being realistic is also paramount.  There is absolutely nothing wrong with real estate that won't be solved when the financial markets establish themselves.  We will probably over react and have much more stringent underwriting guidelines which will put a lid on the speed of the recovery and property appreciation.  Affordability will be the key factor, followed by collateral verification with appraisals being scrutinized with review appraisals if the original appraisal is not supported by AVM's.

So just like every market that has undergone "Irrational Exuberance" we will have a pullback and stabilization and then the market will move forward again.  I doubt we are all going back to tents or mud huts so housing will again become a major component in the U.S. economy.  Helping clients recognize the facts of this market will only help them to make the right decisions.  But be cool, be professional, be factual and you will be not just a survivor but a Trusted Adviser.