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WASHINGTON, DC-Housing markets in many cities are stabilizing, positioning the country for potential long-term housing affordability, according to a new report by the National Low Income Housing Coalition and the Center for Economic and Policy Research. The report also cautions that there are many pitfalls to this ideal story ending.

For starters, the economic downturn could worsen or last longer than expected, further eroding incomes. Also, it may be that policy makers and the market do not take advantage of stabilizing conditions to prepare for long-term affordability–a key factor in this analysis, NLICH analyst and report co-author Danilo Pelletiere, tells GlobeSt.com.

“Home prices have been falling and rents have remained stable, so it is not surprising that the two are on track to converge and we will be back–in terms of affordability–to where we were before the bubble.”

However, “if the economy doesn’t recover in the next four years the ability of folks to gain equity will be severely curtailed. We need to seize this opportunity to boost wages and use programs like the National Housing Trust Fund to lock in affordability for housing.”

The NHTF passed in July 2008 with the intent of building, preserving and rehabilitating 1.5 million affordable rental homes for very low income households. However it has not received funding yet. House Financial Services Committee Chairman Barney Frank introduced earlier this summer “TARP for Main Street Act of 2009″, which would designate $1 billion from TARP profits to the fund.

The report, “Hitting Bottom? An Updated Analysis of Rents and the Price of Housing in 100 Metropolitan Areas,” suggests policy makers implement the following:

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