Officials Say "Market May Turn the Corner"

“I believe we can get to the point within months where we turn the corner on housing" says Paulson, in a televised interview on Fox Business Network.

By Henry Berkowitz Even amid the significant downturn in the real-estate market, there is hope. The U.S., according to Treasury Secretary Henry Paulson, may soon see a turn-around in portions of the housing market. While Mr. Paulson says that while the market may begin a recovery in just a few short months, he acknowledges that it will take some time to fix all of the problems. “I believe we can get to the point within months where we turn the corner on housing,” says Paulson, in a televised interview on Fox Business Network. The corner to which Mr. Paulson is referring would be that point at which home prices stop falling, and sales of homes increase. Of course, it remains to be seen how the numbers for “new housing starts” will effect this decision. Amid a climate where single family home sales are on the decline, many people find Mr. Paulson's comments to be a bit premature. However, with assurances from Freddie Mac and Fannie Mae that their finances are in better shape than initial reports suggested, it's not inconceivable that the market may begin to correct. Since Freddie and Fannie underwrite over half of the mortgages in the United States, their financial health is tied directly to the housing market. Their well-being has a tremendous effect on all sectors of the housing market. If the two mortgage powerhouses have the financial wherewithal to withstand such a downturn, their ability to underwrite mortgages will be positively effected. While the government has offered money to relieve the struggling mortgage giants, their offers have yet to gain acceptance. Owing to this inherent stability, the market may have seen the worst of the downturn, and begin to stabilize. If the market itself can be stabilized, then the trend for the housing market is to head upward. The more loans that the two companies are able to underwrite, the more mortgages that can be offered. Mr. Paulson attests that if new housing numbers begin to slow their downward trend, either with new home-buyers entering the market, or foreclosures decreasing to manageable levels, the market will have nowhere to go but up. These statements, along with pending housing relief legislation, bring hope to an industry that has had a shortage of positive news in recent months.