January Housing on the Up

January Housing on the Up

housing_market_progressionThe U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury recently released the January edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. The latest data show progress among key indicators. In 2013, home sales had their strongest performance in several years, foreclosure starts were at their lowest annual level since 2005 and homeowners’ equity is up $3.4 trillion since the beginning of 2012. While this scorecard notes positive trends in the housing market, officials caution that the economy is still healing from the Great Recession. The full Housing Scorecard is available online at www.hud.gov/scorecard.

“The January Housing Scorecard shows that the Obama Administration’s efforts continue to have a positive effect on the housing market,” said HUD Deputy Assistant Secretary for Economic Affairs Kurt Usowski. “In 2013, the number of U.S. properties which started the foreclosure process was down 33 percent from 2012, while sales of previously owned homes rose by 9.1 percent. With foreclosures down, home sales up, and equity continuing to grow, the housing market continues to make slow, but steadily improving progress.”

“This month’s Housing Scorecard shows the continued need for and progress of the Making Home Affordable program,” said Treasury Acting Assistant Secretary Tim Bowler. “January’s Making Home Affordable (MHA) report shows a steady increase in the cumulative number of homeowners receiving permanent mortgage modifications, while more than 258,000 homeowners have found alternatives to foreclosure, participating in a short sale or deed-in-lieu through the Home Affordable Foreclosure Alternatives Program (HAFA).”

The December Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:

Existing Home Sales Continue to Make Gains. In 2013, there were 5.09 million sales of existing homes–9.1 percent higher than in 2012 and the strongest performance since 2006 when sales reached an unsustainable level during the housing boom. A total of 428,000 new homes were sold in 2013, which is 16.4 percent above sales in 2012 and the highest level in 5 years.

Foreclosures Are Down. According to Realty Trac, a total of 747,728 U.S. properties started the foreclosure process in 2013, down 33 percent from 2012 to the lowest annual total since 2005. A total of 462,970 U.S. properties were repossessed by lenders (REO) in 2013, down 31 percent from 2012 to the lowest level since 2007.

Equity Continues to Grow. According to the Federal Reserve, the equity homeowners have in their homes (total property value less mortgage debt outstanding) is up $3.4 trillion, or 55 percent from the beginning of 2012 through the third quarter of 2013.

The Administration’s foreclosure mitigation programs continue to provide relief for millions of homeowners as the recovery from the housing crisis continues. Over 1.9 million homeowner assistance actions have taken place through the Making Home Affordable Program, including more than 1.3 million permanent modifications through the Home Affordable Modification Program (HAMP), while the Federal Housing Administration (FHA) has offered more than 2.1 million loss mitigation and early delinquency interventions through December. The Administration’s programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals nearly 4.0 million proprietary modifications through November (data are reported with a 2-month lag). In all, more than 8.0 million mortgage modification and other forms of mortgage assistance arrangements were completed between April 2009 and the end of December 2013.

Performance of HAMP modifications continues to improve over time. For modifications seasoned 24 months, 23.6 percent of modifications started in 2011 have disqualified, compared to 28.6 percent of modifications started in 2009. Program data supports that the longer a homeowner remains in HAMP, the more likely he or she is to keep up with their mortgage payments and avoid foreclosure.

january-housing-on-the-up2Payment reduction is a strong driver of permanent modification sustainability. For example, of modifications seasoned 24 months, only 15.9 percent with a monthly payment reduction greater than 50 percent have been disqualified due to missing three payments. By contrast, those modifications with a payment reduction of 20 percent or less had a disqualification rate of 41.2 percent.

Also featured this month in the Administration’s Housing Scorecard is a regional spotlight on market strength in the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area (San Francisco MSA). Like many areas across the country, the economic and housing market conditions in the San Francisco area are improving, but the foreclosure crisis has taken its toll, with the Oakland metropolitan division experiencing more distress than the rest of the MSA. The Administration’s broad approach to stabilize the housing market has been a real help to homeowners throughout the San Francisco MSA. You can read the report here.

“As the housing market continues to improve nationwide, the San Francisco metropolitan area is also showing signs of significant improvement,” said Usowski. “As the regional spotlight shows, from the launch of the Obama Administration’s assistance programs in April 2009 through December 2013, nearly 73,500 homeowners in the San Francisco metropolitan area have received assistance. This is a positive step in our recovery efforts, but more work must be done to help homeowners in this area struggling from an excess of housing construction and unsustainable mortgage lending in the years leading up to the housing crisis and recession.”

The Housing Scorecard Regional Spotlight features data on the health of the San Francisco MSA housing market and impact of efforts to help homeowners at the local level including:

The foreclosure crisis has had an asymmetrical impact on the San Francisco MSA. The Oakland Metro Division (MD) has fared less well than the other divisions. During the housing bubble, home price appreciation in Oakland peaked earlier and rose higher than the MSA as a whole, but the subsequent decline in home prices was greater for Oakland (45 percent) than for San Francisco (22 percent) and that of the nation (30 percent). From 2000 through 2006, the share of distressed mortgages in the San Francisco MSA–those 90 or more days delinquent or in the foreclosure process—were considerably lower than comparable shares in the rest of the nation. The impact of the 2007-2009 recession, however, was more severe for the San Francisco MSA than for the nation, adding to rising mortgage delinquencies.

Economic and housing market conditions in the San Francisco MSA are improving. The share of mortgages that remain underwater has dropped to 2.5 percent in the San Francisco MD as of the third quarter of 2013, down from 9.0 percent a year earlier; in the Oakland MD, negative equity has declined to 13.9 percent from 29.7 percent over the same period. Jobs in the MSA have been increasing at an average annual rate of 38,900, or 2.1 percent, from the second quarter of 2010 through the third quarter of 2013. The Administration’s broad approach to stabilizing the San Francisco housing market has contributed to the improvements as nearly 73,500 homeowners received mortgage assistance between April 2009 and December. Furthermore, the San Francisco MSA has benefitted from $36 million in funding from the Neighborhood Stabilization Program, and the State of California has received $1.975 billion from the Hardest Hit Fund program.

The National Mortgage Servicing Settlement is continuing to provide relief for those in the San Francisco metropolitan area and throughout the state of California. Under the landmark National Mortgage Servicing Settlement, more than 186,000 California homeowners have benefitted from over $20 billion in refinancing, short sales and completed or trial loan modifications, including principal reduction on first and second lien mortgages provided as of June 30, 2013. Nationwide, the settlement has provided more than $51 billion in consumer relief benefits to more than 643,000 families. That is in addition to the $2.5 billion in payments to participating states and $1.5 billion in direct payments to borrowers who were foreclosed upon between 2008 and 2011.