Loan Modification

FHA Commissioner Claims Home Price Increases

By Peter G. Miller

Those who have been worrying FHA mortgages and falling home prices might want to take a look at the congressional testimony given last week by FHA Commissioner David H. Stevens.

Stevens had some surprising remarks regarding home values, numbers not seen previously.

“As measured by the widely referenced FHFA index, home prices have been rising more or less steadily since last April. As recently as January of 2009 house prices had been projected to decline by as much as 5 percent in 2009 by leading major macro-economic forecasters. This is all the more surprising since most forecasters had underestimated the rise in unemployment that has occurred over the past year.

“Homeowner equity started to grow again — increasing by over $900 billion by the end of September, or $12,000 on average for the nation’s nearly 78 million homeowners, and helping our economy grow at the fastest rate in six years in the fourth quarter of last year.

“And mortgage rates which have been at or near historic lows over the past eleven months have spurred a refinancing boom that has helped nearly 4 million borrowers to save an average of $1,500 per year on housing costs — pumping an additional $7 billion annually into local economies and businesses, generating additional revenues for our nation’s cities, suburbs, and rural communities.”

NAR Numbers Down

The Stevens figures contrast mightily with the numbers released by the National Association of Realtors last month.

According to NAR, in the fourth quarter of 2009 “67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter only 30 MSAs showed annual price increases and 123 areas were down.

“The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less.”

Federal Housing Finance Agency Numbers Down

Not only do the NAR numbers show a price decline, so do the numbers from the Federal Housing Finance Agency (FHFA), the source of Stevens’ information. It said last month:

“U.S. house prices fell slightly in the fourth quarter of 2009 according to the Federal Housing Finance Agency?s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI, calculated using home sales price information from Fannie Mae and Freddie Mac-acquired mortgages, was 0.1 percent lower on a seasonally adjusted basis in the fourth quarter than in the third quarter of 2009. Over the year ending with the fourth quarter of 2009, seasonally adjusted prices fell 1.2 percent.”

Have home price declines become less severe. Probably.

Have home prices started to rise? In some areas, yes. In most areas, no.

Are foreclosures no longer a problem? You’re kidding.

Are FHA mortgages still a good deal? Absolutely. FHA qualification standards, which have always been reasonable, are getting tougher — and that’s good both for borrowers and the FHA.

Does Mr. Stevens testimony need some clarification? You bet.

Full post as published by FHA Mortgage Guide on March 15, 2010 (boomark / email).