BOSTON (MarketWatch) -- Recent steps by the government including a tax incentive for first-time home buyers and a plan to stem foreclosures likely won't be enough to offset the credit and economic woes that are weighing on the housing market, Wall Street analysts say.

The Obama administration earlier this week announced a $75 billion plan to help millions of struggling borrowers stay in their homes by modifying the mortgages. See earlier coverage.

Meanwhile, the economic stimulus package contains an $8,000 tax credit for first-time home buyers who purchase between Jan. 1 and Dec. 1, 2009 -- this credit doesn't have to be paid back, unlike the $7,500 perk available in 2008.

Still, some analysts are warning that despite the government's efforts and improving affordability as prices and mortgage rates fall, the housing market is unlikely to escape its doldrums this year.

J.P. Morgan home-building analyst Michael Rehaut on Thursday said several significant structural problems will continue to sap the housing industry.

"Specifically, we believe the administration's foreclosure plan will ultimately have only a modest positive impact against the massively large and complex quagmire of troubled mortgages," Rehaut wrote in a research note that reiterated a cautious stance on his sector.

"At the same time, we believe this year's spring selling season will likely be another disappointment, particularly as the recent homebuyer tax credit should have a minimal effect on demand," he said. "Lastly, we continue to view rising unemployment and still-depressed consumer confidence as material obstacles to any recovery in housing."

The foreclosure plan unveiled this week is designed to provide assistance to 9 million at-risk homeowners. Although the proposal was greeted favorably by some lawmakers and bankers, skeptics expressed concern that the plan may have a difficult time getting off the ground. See related story.

Home-builder stocks have traded lower since President Barack Obama announced the Homeowner Affordability and Stability Plan.

The plan's goal "is to help homeowners avoid foreclosure," investment strategist Ed Yardeni said Thursday. "It does nothing to reduce the huge overhang of unsold new and existing homes."

Housing starts are down a record 56% in the past year and are down 79% from the peak three years ago, the Commerce Department reported Wednesday. See Economic Report.

Tax credit

The controversial stimulus package includes an $8,000 tax credit for first-time home buyers, although there are income restrictions. In the earlier Senate version of the bill, the amount was $15,000 and included more types of buyers.

The tax credit is equal to 10% of the price of the home, up to $8,000. The home-buyer credit is reduced for taxpayers with adjusted gross income above $75,000 for single filers and $150,000 for joint filers. Read more on how the tax credit works.

One Wall Street analyst said the $8,000 tax credit "isn't all that impressive" considering how fast home prices are falling.

Nishu Sood at Deutsche Bank noted that across 41 major metro areas, median home prices have fallen by $58,000 from peak levels, with $28,000 of that coming in the second half of 2008 alone. The housing downturn is in its third year.

"Another $8,000 incentive to buy a home certainly doesn't hurt, but if $58,000 to date hasn't done the trick to buoy demand will another $8,000 make that big of a difference?" Sood wondered in a report to clients. "While the stimulus package's changes to the home-purchase tax credit are undoubtedly an incremental positive, we feel that it is unlikely to alter the overall trajectory of the housing market in the next 12 to 18 months."

He pointed out the credit doesn't help buyers accumulate more down payment because it can be claimed only after the sale closes.

"After years of lower down payment requirements and lower savings rates during the housing boom, the ability to make an initial down payment remains a major obstacle to reigniting housing demand," the analyst wrote. "Also, the purchase tax credit is restricted to just first time buyers, a group likely to have less to buffer them from rising job and income losses."