Increase in Median Home Prices, Many Borrowers Still Underwater

24 Aug

Median home prices are up 9.4% from the same time last year, the greatest improvement since the beginning of the housing recovery.   This year’s second quarter saw the largest quarterly growth in home prices in nearly seven years, according to FHFA’s purchase-only home price index (HPI).

In addition, a data sample of 12 metro areas across the country showed that the share of distressed sales in the market fell to 29.1 percent, a sharp drop from the first quarter’s 38.3 percent share.

The share of homeowners with underwater mortgages continued its decline in the second quarter, according to the Zillow Negative Equity Report.  About 15.3 million homeowners with a mortgage were underwater, or 30.9 percent, a drop from 15.7 million or 31.4 percent.

Many of these borrowers are taking advantage of the HARP program.  Created in 2009 as part of that year’s economic stimulus program, the Home Affordable Refinance Program (HARP) is a government-backed program for homeowners whose homes have dropped in value since 2009.

HARP allows for unlimited loan-to-value and, more than 3 years after launching, the program is finally building its momentum. Through the first six months of 2012, more than 422,000 U.S. homeowners used HARP.

The pace at which HARP loans are closing is quickening, too.

  • March 2009 – June 2012 : 37,046 HARP loan completions per month, on average
  • January – June 2012 :  70,495 HARP loan completions per month, on average
  • June 2012 : 125,865 HARP loan completions
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