If it’s true that income is a key driver of housing prices, then the sharp rise in unemployment will keep housing prices low and primary home foreclosures on the rise, all pointing toward a tough beginning for real estate in 2009.

Although interest rates have fallen to historic lows, the drop doesn’t seem to be translating into more home sales. According to the Mortgage Bankers Association, nearly 77 percent of all mortgage activity for the week ending Dec. 12 consisted of refinances, up from about 74 percent the previous week. So, while many are taking advantage of the lower interest rate environment to reduce their monthly housing costs, it is not bringing new buyers into the market – at least not yet.

But with a new administration coming into the White House and advanced technologies changing the way homes are bought and sold, there is, indeed, some exciting news on the horizon.

With that, here’s what real estate experts say is in store for buyers and sellers in the new year:

MORE VIRTUAL SHOPPING
1 The explosion of social media as a home buying and selling tool.

THE LOWDOWN While it’s still unlikely that buyers will purchase a new home without a walk-through, there’s no denying that new technologies – think blogs, wikis, videos, social networking sites – will continue to transform the buying-and-selling process into a multi-touchpoint experience. In addition to showcasing homes via virtual tours, more agents are marketing houses to potential buyers through social networking sites, such as Facebook.com, or doing something as simple as snapping a photo of a home with a phone and uploading it to Flickr.com.

WHAT IT MEANS TO SELLERS
While agents are embracing technology, they should not abandon traditional methods of selling, such as open houses, says Lawrence native Joshua Dorkin, president of biggerpockets.com, a 25,000-member social network for real estate professionals, investors and consumers. “Virtual tours can be used to screen properties you’re interested in, but when it comes down to it, you need to put your feet on the ground.”

WHAT IT MEANS TO BUYERS
Social media create a variety of new avenues for home buyers to start the home-buying process as well as learn about their options. Conduct a search on “Long Island real estate” on YouTube.com and videos showcasing homes for sale and neighborhood descriptions pop up.

Join Twitter.com, which is a free social networking and micro-blogging service that allows its users to send and read other users’ updates, and you’ll be able to get instant updates on homes for sale from agents such as Jericho native Jason Haber. He is director of sales and marketing for the six-member Haber Team at Prudential Douglas Elliman Real Estate in Manhattan, who, in addition to Twitter, uses YouTube, Flickr, Digg, Reddit and Facebook to sell and market property.

“The members of the Haber Team have thousands of friends on Facebook,” says Haber. “So when a member of our team updates their status to read, ‘Just got an incredible new two-bedroom, two-bathroom listing on the Upper East Side at a fantastic price,’ that can generate interest in a property since so many people will read that status update.”

RECEPTIVE SELLERS
2 Housing market to remain in holding pattern, or may sink lower, until at least the second quarter of 2009

THE LOWDOWN
With the economy in a recession, major job layoffs in the financial sector and reduced or eliminated year-end bonuses, many would-be home buyers are choosing other options, says Lior Aldad, a Manhattan real estate attorney who lives in Roslyn. “The record low mortgage rates have helped stabilize home prices, as home buyers with good credit and jobs can qualify for these ultra-low rates and buy their dream house. With that said, very few people fit that category today.”

Scott Donnellan, a licensed sales agent for RE/MAX Innovations in Wantagh, says he’s more optimistic. “The second quarter will explode,” he says. Why? Prices have stabilized, he says. Once buyers realize that, they will start to take advantage of the low mortgage rates and programs for first-time buyers.

WHAT THIS MEANS FOR SELLERS
It will continue to be a buyers’ market, experts say, so they advise keeping home prices realistic.

WHAT THIS MEANS FOR BUYERS
“Receptive sellers, lower prices, incredibly low mortgage rates – it’s time to start buying again,” says Jamie Winkler of Winkler Real Estate in West Islip and part-owner of Long Island Real Estate Report. “Buyers are still a rare commodity. They should be making offers on houses. Sellers are so anxious – the ‘Farmer’s Almanac’ predicts a lot of snow. There are so many different factors that make it a perfect time to buy.”

‘YEAR OF THE RENTAL’
3 Increase in rent-to-owns, rentals and rental rates

THE LOWDOWN
Individuals who cannot get loans because they don’t have a down payment or a high enough income, and those who went through a foreclosure or short sale, will not be able to buy homes for years. Many will be forced to rent. “2009 will be the year of the rental,” says Dorkin, adding, “The condo construction projects will likely end up being unable to sell their units and will end up renting their condos out.”

WHAT IT MEANS TO SELLERS
If you’re relocating for work or scaling up to a better house and the market is preventing you from selling your home, then rent-to-sell is something to consider, real estate experts say. This can help you minimize the financial damage of potentially paying two mortgages every month.

WHAT IT MEANS TO BUYERS
A lease-option is like a simple lease in which a tenant rents a house from a landlord and pays monthly rent and expenses; however, the “option” locks in certain terms for the tenant’s future purchase of the home. If you’re a cash-strapped home buyer, a rent-to-own agreement may be a way for you to buy a home and accumulate a down payment, as well as check out a neighborhood and give yourself time to decide whether you want to buy. Any agreement should be formalized in a written contract that specifies the monthly rent, the amount of rent that will be credited to the down payment, the sales price and the expiration date of the option.

REGULATION
4 More regulation in the real estate industry

THE LOWDOWN
As part of his still-in-the-works bailout plan, President-elect Barack Obama has made several pledges to ease the housing crisis, including a 90-day moratorium on foreclosures; changing the bankruptcy law to give courts the power to modify mortgages when lenders won’t; a 10 percent mortgage tax credit for homeowners who don’t itemize their taxes and a crackdown on abusive lending practices.

“Where the regulation needs to really come in is regarding the predatory lending practices, and the use of these creative financing tools,” says Donnellan. “One of the biggest problems we saw during the housing meltdown was that too many people were getting mortgages that had no business getting a mortgage, and for numbers that they had no business asking for. … It looks as if the mortgage industry itself is tightening its standards.”

WHAT IT MEANS TO SELLERS
With tighter regulations, prospective buyers will grow more confident and emerge from the sidelines. Plus, there will be more qualified buyers better prepared to buy a home immediately.

WHAT IT MEANS TO BUYERS
Buying activity will eventually drive prices higher.