I was watching the news this morning about this matter.  Apparently there was a small drop in the interest rates already and they expect them to decline even further to below 6% in the next week or two. First time home buyers are being offered a $7,500.00 tax credit to buy foreclosure properties.  The federal government and some state governments are offering relief to prevent further foreclosures. RESPA is being reviewed for reform. I do not think it is going to take 18 months for a turn around with all of the remedial measures that have been implemented. I think a lot of it is going to depend on the ability of home buyers/owners to satisfy the credit requirements to qualify for a mortgage for purchases and refinance.

By way of example...my nephew in Long Island, New York has already benefited from these measures. It is probably one of the most expensive areas in the country to buy real estate. He got a foreclosure property for a fraction of its market value. The property is a beautiful water view property on Long Island Sound. It needs some repair.  He and his wife bought it for the cost of paying off the previous owner's mortgage.