Continuing bleak news in the housing industry creates opportunities for savvy buyers and sellers. Thoughout history, we see that downturns and hard times in any business or industry create tremendous opportunities for others. Such is the case in the housing industry. Smart buyers, sellers and investors are using the media, the data and the mood to their advantage.

Here are some of the current stories about the housing and lending industries:

From CNN Money – Home prices are likely to end 2008 below last year's peaks as slump is now seen as worse than previously forecast.

The weaker than expected outlook for the second half of 2007 should leave prices down 1.7 percent for the entire year, compared to its previous forecast of a 1.2 percent decline. That would mark the first full year decline in existing home prices since the group started keeping track of median price data.

"There's been an unusual hit to home sales, starting in March when subprime (mortgage) problems emerged, and more recently when problems spread to jumbo loans, with many potential buyers on the sidelines," said a statement from Lawrence Yun, the group's senior economist.

The much ballyhooed FHASecure Program is estimated to possibly help a total of 60,000 borrowers out of 1.1 million that need help. Given that, this statement from the FHA seems pretty lame: "Unfortunately, we think there will be some families that we won't be able to help," the FHA official says.

Key factors of the FHA bailout plan:

• FHASecure is geared toward the homeowner with an ARM who was paying on time until the rate was reset and the monthly payment went up.
• There are loan-size limits that make these mortgages unworkable for high-cost markets, such as most of California.
• Borrowers will need at least 3 percent equity, the FHA won't help people who owe more than their houses are worth.
• The application deadline is the end of 2008.

Former Fed Chairman Alan Greenspan told corresponent Leslie Stahl (CBS 60 Minutes) he knew that homebuyers were getting loans with ultra-low adjustable interest rates that would rise quickly soon after, but he didn't think they'd blow up to the degree they ultimately did. "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said. "I really didn't get it until very late in 2005 and 2006."

From the Real Estate Journal – An analysis of federal data on nearly 14 million U.S. home loans made last year portends more misery for subprime borrowers, lenders and investors, as existing loans are pressured by falling home prices and lenders put tougher underwriting standards in place.

Again from CNN Money – Tighter lending standards have put many home sellers, owners and buyers in a bind.

Whether you're a home seller, owner or buyer, by this point you've got to be feeling a little rattled. The bad news about the housing market seems never ending: Foreclosures have more than doubled over the past year.

From USA Today – Housing costs punish family budgets – 17 of the 20 housing markets noted in the table that accompanies thie article are in California.

How do you spell Affordability Crisis?

From the East Bay Business Journal - A total of 9,477 properties sold at foreclosure auction in California in August, up 10.4 percent from July, according to ForeclosureRadar of Discovery Bay.

From Inman News – Mortgage brokers say one-third of clients failed to close in August.

A more troubling statistic, perhaps, was the survey's finding that 57 percent of borrowers facing interest-rate resets on their adjustable-rate mortgages (ARM) were unable to refinance. That could push up delinquencies and defaults if those borrowers are unable to manage higher monthly payments.

Reading all of this is enough to make you believe that it’s impossible to buy or sell a home these days. The truth of the matter is that all of this news revolves around less than 5% of the U.S. housing market. Believe it or not, people are still buying and selling houses!

All of this news is helping buyers and investors to negotiate great deals. The media is actually helping to sell the deal.

What’s a seller to do? If you must sell and you live in an area with a high inventory of houses on the market and an increasing Days on Market index, you must price your house as one of the best deals in your price range. This means that your house must be one of the bottom three in price for all comparable houses on the market.

If you don’t have to sell, then you should seriously consider taking your house off the market. Keeping your overpriced (maybe not in your opinion, but you’re not the one buying it) house on the market for another 90 to 180 days and chipping away at the price ineffectively is going to hurt you in the long run.

If you’re upside down in your house (owe more than it is worth now) and are facing a re-ARMing situation, here is the hard pill you need to swallow: you need to take assertive, aggressive action that you most likely want to avoid. You are kidding yourself, if you think you are going to find a buyer in this market to minimize your loss.

Read the news! Everyday, the media is telling people the world of hurt you’re in. Nobody is going to sweeten the pot, because you’re a nice guy in a bad situation. Here’s what you need to do: Get Real & Get the Facts. Talk to your lender and your accountant to get the absolute truth of your situation and your existing options. Talk to a Realtor that actually knows the market, a professional who is more concerned with telling you the truth than getting another listing.

You really have only three choices: take a loss, nurse your way through to better times, or foreclosure. The worse decision you can make is to get too conservative in trying to minimize your loss. I know, we all want to do that, it’s the natural move, but in this market time will kill you.

Time is not your friend in this market unless you act boldly. Sellers that keep their prices high are helping to sell their neighbor’s house.