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Everyone wants to know when the housing market is going to rebound. Homes that were once increasing in value by double digits every year are now losing value every day. ARMs are coming due and mortgages are doubling or worse. People are being forced out of their homes that are actually worth less than what they paid for them.

It's a scary time for everyone. Real people are being severely by this crisis every day. So how could anyone be optimistic in this climate?

First, the Federal Reserve Board, Congress, the president, and the presidential candidates are fully aware of this issue. Luck for us, we're in an election year. Election years are the years that things actually get done in Washington. Representatives want to prove to their constituents that they are listening (although there is a good chance they've been ignoring their constituents for the past three years).

The economy has finally become the number one issue on voters minds. Everyone is talking about it and speculating. This is a good thing. So much of economic recovery is psychological, and in today's media-driven world, opinions can shift very quickly.

Soon, Ben Bernanke and the Fed will be forced to lower interest rates. Most likely rates will come down more than once this year. Each time rates come down, those potential home buyers waiting on the sidelines will consider getting back in the game. And the fate of the real estate market depends on these potential home buyers. They are at the absolute core of the recovery process.

Right now, tens of thousands of people who would like to purchase a home are either renting or waiting to sell their own homes until the real estate crisis is over. Everyone is looking for the bottom of the real estate correction. As soon as we collectively find the bottom, I predict we will see boom of home buying. Buyers will be scrambling to snatch up a great value before home prices climb back to the levels they reached a few years ago.

This boom will feed off itself, and homes should recover most, if not all of their value. Over the past few years, new home construction has fallen way off. This is a good thing, because once buyers come back to the table there won't be a ridiculous surplus of homes, like there was two years ago.

The real estate market is 100% psychological. People's opinions change quickly. All they need is a nudge in the right direction to be swayed. Once the Fed is able to entice some buyers back into the market, the deluge of jittery buyers will come rushing back.

Learn more about this author, Sean Curtis.
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