As expected following the housing boom's easy credit environment, credit is tightening. Earlier this month new lending guidelines were issued that will likely make it more difficult for borrowers to get loans.

First, lenders offering loans with payments options, loans with teaser rates, and other non-traditional loans will now be required to qualify borrowers based on the fully index loan rate rather than the initial or lowest rate.

Second, income verifications is encouraged and with a new IRS express income verification process, no document and low document loans, otherwise known as stated income and stated assets loans, will likely be used much less.

What this likely means to real estate sales is a further reduction in demand and further pressure on prices. Just as easy money fueled the past boom, tighter money will likely either make the downturn longer, steeper, or both.

This will likely give pre-approved buyers more leverage with sellers, as there will likely be less buyers ready, willing, and able to buy.