A “rebounding housing market” isn’t exactly in the future, says Peter Wallison, author of the much-commented-upon opinion piece in the New York Times entitled “The Bubble is Back.” A dissenting member of the 2011 Fiscal Crisis Inquiry Commission, Wallison blames government housing policy for the last bubble and warns that another is soon to burst.

This is good news for the short sale market, as well as homeowners who simply don’t see any way they’ll be able to spend another decade paying on a home that’s worth half what it was when they bought it. Another housing bubble cycle means more loans made that will ultimately cause a secondary crisis, and it may not take as long as you’d think.

Wallison, who is also a senior fellow at the American Enterprise Institute, appeared on Here and Now for an interview, and said that the lenders buying and selling mortgages right now are following the same pattern that was evident before the last housing bubble burst.

Wallison pointed to the rental market, showing how the housing and rental markets track each other almost side by side as far as affordability. Typically, if the cost of owning a home is higher, more people will rent, and if it is lower, more people will buy houses.

The first housing bubble expanded in the late 1990s, when home loans were being given at extraordinarily low interest rates and with a smaller down payment than usual. When the bubble burst, lenders tightened down on regulations. Just seven years later, the market still hasn’t recovered, but those regulations are now being loosened again.

Credit is still tight for many, but low interest loans and 5% down payment are terms starting to be thrown around again. According to Wallison, 53 percent of all of the loans that are being made in the United States today are loans for purchase of homes of 5 percent or less. He warns that if housing underwriting standards are kept low and if down payments are kept low, another bubble burst is inevitable.

What does that mean for short sales? So far, so good – people who are underwater can still take advantage of short sales before the bubble hits, and those who miss the window won’t have long to wait if Wallison’s predictions come true. Talk to a short sale specialist today and find out if you should be looking into a short sale before you end up in crisis!