Housing Market - Lower prices and Interest Rates

"Here's the catch - the demand for money in the housing market is probably not the problem right now, because the aggregated buyer demand will not change unless lending requirements change at the current price levels. There are a fixed number of buyers in the market to which lenders will approve and make loans. Lenders are offering few indications that they will be loosening lending requirements in the near future, and so we can't expect new buyers to enter the market simply with cheaper money available".
"Inventory has mostly leveled off since the end of 2007, but prices are still falling at a constant rate. There are just no buyers for the homes on the market at the price levels. As such, the suppliers (home sellers) are adjusting their prices until they will reach a clearing price where willing, able, and funding-approved buyers will enter the market and begin purchasing homes.
To bring this back to John Taylor and his target for the Federal Funds rate - the problem with the housing market will likely not be improved with a decrease of interest rates, and cheap money bears considerable responsible for the housing price mess. Instead, long-term relief has better prospects with lower price levels that will clear the market". Seekingalpha

It looks an interesting explanation of what is happening. In the ongoing vicious circle where household wealth goes down and jobless claims increase and the economy overall shrinks it is difficult to say when and at what price levels it will be possible to establish a solid base for housing prices.