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It's no secret that most of California's housing markets have been in a prolonged slump. So, at the start of this new year, what would it take for housing to reverse course and enter a sustainable rally?

The answer involves economic,political,and social factors, all of which revolve around an end to the uncertainty that has characterized so much since the national housing crash began. With that in mind, here's a look at five areas in which predictability would make a difference;

1- DEMAND: Creation of good-quality jobs and a drop in the unemployment rate top off the list of factors that would help housing market recover, according to Mark Fleming, chief economist at CoreLogic, a real estate research firm in Santa Ana. " We need to find a way to give people a sense of certainty about their future income prospe:cts," Fleming syas. " You're not goint to buy a home if you fear you might not have an income to pay the mortgage."

2- SUPPLY: New home construction is barely a blip since builders have gone into hibernation. There's no reason,"says Richard Green, director of the Lusk School of Real Estate at the University of Southern California in Los Angeles, to build more houses without more demand. But bank foreclosures are a significant drag on housing markets. Many are listed for sale while others lurk in what's known as the "shadow inventory," a difficult to measure inventory of homes likely to be liquidated in the future. A sell-off distressed inventory would help move housing toward recovery. Yet fits and starts are likely even then since, as Green explains, "potentially, even a small uptick in prices will lead to a large flood of houses on the market again."

3- EQUITY:Approximately one-third of California homeowners who have a mortgage owe more on their lona-or loans- than their home is worth, according to CoreLogic data. That means millions of homeowners are "underwater" and can't sell their home without a short-sale approval from one or more lenders. The solution is to reduce those loan balances or at least give those homeowners some hope of equity in the future, says Green.  The need for a bailout is particularly acute in places that have been hardest hit by the housing downturn.  Green says, "Without principal reduction I just don't see that happening for a long, long time."

4- FINANCING: Tight financing also constrains demand. Sound underwriting is welcome, but delays in loan approvals deter both buyers and sellers, Green notes. Impatience leads buyers to give up. Frustration prompts sellers to settle for lower all-cash offers. " If it took three weeks, instead of three months, to make a decision on a loan, that would have a very positive influence on the market," he syas.

5-POLICY: What housing really needs is " a clear long-term housing policy," says Sean O'Toole, CEO of ForeclosureRadar.com in Discovery Bay. The federal mortgage interest tax deduction, Fannie Mae and Freddie Mac, and Prop. 13 have all been in play, creating uncertainty for real estate investors, home buyers, and homeowners, O'Toole explains. Uncertainties in foreclosures are part of the problem as well, O'Toole says. The simple acknowledgement that millions of properties are headed into foreclosure, a return to mark-to-market accounting that would force lenders to resolve their nonperforming assets, and more consistency in foreclosure procedures from state to state and lender to lender is what he wants to see, O'Toole says. The bottom line is that major change will be needed to spark a housing recovery. But all is not lost. Fleming syas people will continue to want to live in California and the state has ripped the Bank-Aid of housing's wounds relatively quickly compared with some other sates.

Read More:Marcie Geffner- CAR.org