Puri said there is talk of a "superfund" bailout to the housing crisis, but noted it would be a mistake to go in that direction. "What we need is time, not a superfund to bail out the system. It will take at least a year, maybe longer, to get [the housing market] back to normal."

But don't expect normal conditions to resemble the normal of recent years, and say goodbye to the risky loan vehicles that precipitated the summer's credit crunch. The new normal will be one with much tighter underwriting practices and more money down, noted Puri.

Until the recovery, expect more bad news in the short term. Record consumer spending of recent years fueled the economic boom, with refinancing of mortgages giving consumers an added economic boost. Now, it's time to pay the piper, as those refis are coming due, noted Puri. "September had the highest ever resetting [of mortgages] with $31 billion. [Resets] will stay at that level through the middle of 08," he added.