THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES. Yeah, but those are surprisingly hard to come by. I note that houses in my neighborhood that are selling are going for 10-15% less than their 2005-2006 selling prices. But most of the people putting houses on the market are asking for 10-20% more than the 2005-2006 price, and are grimly hanging on rather than lowering the price to anything that might sell. My assumption is that either (1) they’re idiots: or (2) they bought them with tiny down payments, and can’t bring enough cash to the table to sell at the realistic selling price. (I’m always amazed to find out how many people with expensive houses don’t even have enough cash to cover the real estate commission if they can’t cover it out of the sale, but that’s often the case.) This problem will take quite a while to work out, I think.