Residential housing starts have hit a 50-year low. That's actually very central to the housing market recovering. The pitiful pace of new construction means we're one step closer to supply and demand being back in sync in the housing market.

The average price of a home in the United States year over year is down by 13.8%. Now, you can look at those numbers and feel glum. Or you can realize the actual selling prices have been so heavily depressed by what's going on the bubble states and with all the foreclosures.

The truth is that the home market can not recover until supply and demand are in sync. The oversupply of houses means there's no market for houses that were bought at or near the peak. So they go into foreclosure and are snatched up by first-time homebuyers or investors. That creates a temporary floor to the market. Over time, month after month of depressed stats on home building means that household formation will soak up the inventory. The very act of the lack of building helps that happen. Clark predicts that the healing in the housing market will be anytime later this year to 2012 depending on your location in the country.

The one tough thing right now is if you have a house you want to sell or have to sell. We're not talking about the foreclosure crowd here. A new Home Gain survey of real estate agents finds that those on the market who are not in distress are overwhelmingly overpricing their homes. They're relying on old comps. Some 6 out of 10 are overpricing! Only 19% of people are pricing realistically.

The consequence is that you tend to get a lower final sale price if you overprice upfront.

Also, beware of the "hero" real estate agent. That's the person who comes in with the highest estimate of what they can sell your house for. Don't fall for it.

Be realistic about the price and you'll improve the odds of selling in an imperfect market. The best answer if you don't have to sell is to hang tight, though there's one exception. If you want to move up in house, now is the time to get a bigger foreclosed house. It will make be worth it to take hit on the sale of your house to move up in house.