What's required for a Westchester County housing rebound now: jobs.

The jobless rate is one of the biggest drags on the housing market today, according to the report. And many economists predict unemployment will remain high as discouraged workers head back into the labor force and job gains come slowly.

If history is a guide, what happens with jobs will matter the most to the strength of the housing rebound," said Eric S. Belsky, executive director of Harvard's Joint Center for Housing Studies, in a news release. Jobs keep homeowners out of foreclosure and help others feel confident enough to form households.

Another problem: Affordability issues are still lingering, said Nicolas P. Retsinas, the center's director. According to the report, 40.3 million households spent more than 30% of their income on housing in 2008, and 18.6 million spent more than half of their income, up from 13.8 million in 2001.

"Notwithstanding the fall of prices and tempering of rents, there are serious affordability challenges," Retsinas said.

Real median household incomes are poised to end 2010 lower than they were in 2000, according to the report. The household median income was $49,800 in 2008, down from $52,400 in 2000, the report said, citing the most recent data available.

Meanwhile, an estimated one in seven homeowners has a home worth less than they owe on their mortgage, and 5 million need their home price to rebound by 25% before they're again above water.

The Harvard report compiles data from various sources to create a snapshot of the state of the U.S. housing market. This most recent edition finds that even if the worst housing correction in 60 years appeared to turn a corner in 2009, it still was a painful year -- and the pain isn't over yet.

Despite somewhat of a comeback in home sales and housing starts last year -- thanks to improved affordability for first-time buyers and a dose of government intervention -- foreclosures continue to hammer homeowners and the neighborhoods in which they live, increasing inventory and depressing prices, according to the report.

On the flipside, Ted Gayer, senior fellow at the Brookings Institution, said he's also concerned how a weak housing market is working to affect the broader economy.

"There is a lot of evidence that people who are underwater in their homes are less mobile, less likely to move," he said. "They're tied to their home," and it's harder for people to sell their homes and relocate for a job.

Will Gen Y buy?

Household formation has slowed during this recession, partly because uncertain or jobless workers chose to live with their families or roommates instead of living on their own. But in the future, demographics should start working for the overall housing market's favor, according to the Harvard report.

The echo-boom generation is already larger than the baby boomer generation, and the baby-bust generation born between 1966 and 1985 is nearly as large. Add immigration projections, and household growth should approach 15 million from 2010 to 2020, according to the report.

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