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January Housing on the Up

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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.

Payment 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.

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