Housing has been the epicenter of this current financial crisis. Massive home price depreciation coupled with extreme overexpansion has lead to an enormous glut in housing inventory to the tune of nearly 1 million units, or 10 months or more of inventory. Consequently tighter credit standards and a lack of new housing permit starts suggest that the housing market is still in trouble.

That said, there are some silver linings. Recent government actions to lower mortgage rates have worked, lowering the prime rate for some borrowers by as much as 150 basis points in less than a week's time. The average house on the S&P Case-Schiller Index shows a 21 consecutive monthly decline in prices, and willing buyers are likely to take advantage of this decline and buy a home.

It's time to start looking around in the housing equity sector, and

Doug Kass

of Seabreeze Partners agrees. On

CNBC's

"Kudlow & Company," Kass said that housing prices will likely bottom out in late 2009 and that he is looking at certain homebuilders on the long side.

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