Can Obama Cure America's Housing Headache?

"Mr. Obama's economic team has consistently said it wants the housing market to work without significant government support," notes Eavis. But with 92 percent of all new residential mortgages established in the latest quarter "backstopped by various government entities," it's clear the administration hasn't made much progress on that front.

One reason for the lack of movement may be that the obstacles are so intractable. "Housing policy is hard to tackle because so many people have benefited from the status quo." writes Eavis. "The entire real estate system - the banks, the agents, the home buyers - all depend on a market that provides fixed-rate, 30-year mortgages that can be easily refinanced when interest rates drop. That sort of loan is rare outside of the United States. And any effort to overhaul housing and the mortgage market could eventually reduce the amount of such mortgages in the country, angering many and creating a political firestorm."

Eavis believes a second term president may be the right force to take on these challenges, and that the housing market may be ready to deal with a government pullback. He outlines several steps that the administration could take to get the private sector more involved in the mortgage market, and allowing the government to focus on lower-income borrowers.