By September 27, 2010 0 Comments Read More →

US Home Values Increase By $1 Trillion

Given the weak state of the housing sector it was surprising to hear that home values have grown by $1 trillion since June 2009.

According to FHA Commission David H. Stevens, “homeowner equity started growing again in the second quarter of 2009 — to date, increasing over a trillion dollars, or close to $14,000 on average for the nation’s nearly 78 million homeowners.”

Better Values — But Not Everywhere

There have been a number of recent reports which show that home values have begun to stabilize — an expression which is much better than fall, plunge or dive.

For instance, the National Association of Realtors reports that the price of a typical existing home was $179,300 in August, up 1.2 percent from a year ago. That’s good news, but not as good as the typical price reached in 2006 — $221,900.

The trouble is that the results have not spread evenly across the country. Huge foreclosure areas remain in Florida, Nevada, Arizona, California, Michigan, Ohio and Illinois. RealtyTrac reports that foreclosure notices continue to top 300,000 month after month, hardly evidence of good times for all.

The FHA Didn’t Run

Stevens also makes a point that many people don’t want to hear: Private lenders fled the housing scene, leaving behind millions of toxic loans, distressed borrowers and foreclosed houses.

Meanwhile, the FHA was there to provide financing. It didn’t lower it’s standards, charge prepayment fees, stop documenting loans or offer terms which were enticing upfront but poisonous in the short term. It offered what it has always offered: simple, insured mortgages that people could understand.

Is the FHA responsible for that trillion-dollar gain in values? Not entirely. But in part, sure. Just ask where the housing market would be if only private lenders were around and there was no FHA.

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Posted in: Mortgages

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