I disagree. Fewer buyers than sellers, both willing and unwilling, means prices continue to drop. Much of the growth in our past "healthy" economy came from real estate. While that may not seem like the most sound basis, it was the case. There is a simple answer to the problem of Freddie and Fannie; Break them up into numerous smaller parts. Then, each smaller company could be product specific, offering financing to the lowest risks all the way to high risk. In a scenario like this, there would be competition and no misrepresentation of what the product was when packaged and sold on the secondary. This would also make financing available to higher risk buyers, which isn't in itself a bad thing. Investors in a high risk mortgage would realize a much higher return in their investment.
In a perfect world, only excellent borrowers would be able to qualify for a loan. In the real world, that excludes too many potential borrowers. After this current Obama economy, people with great credit and strong incomes are becoming a small minority of the over all population.
It's not such a terrible thing but it may not necessarily be the end result, as the Wuli's post #18, on Canadian housing market and ownership rate, shows. In other words, housing prices might have to find the "natural" ownership rate...
Investors in a high risk mortgage would realize a much higher return in their investment.
Reward would become commensurate with risk, and that is how free markets work, i.e., free from distortion of government's influence and direct or indirect (mandated or incentivized) malinvestment.