Housing Finances Continue to Improve

More good news on the housing front came this morning as fewer homeowners are underwater on their mortgage obligations. In turn this will help drive additional consumer spending, along with more mortgage refinancings and fewer home foreclosures, all of which are necessary to an improving economy.

We're not out of the woods yet, of course, but the progress is both real and undeniable. Besides, we have to learn how to walk again before we will be able to resume running.

Negative home equity narrows in fourth quarter has the good news:

"Supported by increasing home prices, the U.S. housing market saw negative equity narrow at the end of 2012 . . . .

The value of negative equity, which measures when a borrower owes more on a mortgage than a home is worth, narrowed $42 billion to reach $628 billion at the end of the fourth quarter from $670 billion at the end of the third quarter. About 21.5% of all homes with a mortgage had negative equity at the end of the fourth quarter, down slightly from 22% at the end of the third quarter.

Looking at the states, just five accounted for almost one-third of total U.S. negative equity: Nevada, Florida, Arizona, Georgia and Michigan. In all of these states more than 30% of mortgaged properties had negative equity. About 1.7 million properties rebounded to positive from negative equity last year.

Despite a strengthening housing market, almost one-third of the 38.1 million residential properties with positive equity have less than 20% equity, a level under which borrowers face tougher underwriting standards and may have trouble with new financing.

"There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen," said Anand Nallathambi, CoreLogic's chief executive. "The trend toward more homeowners moving back into positive equity territory should continue in 2013.""

Summing Up

For a more detailed look at the developing good news picture on the housing front, see also More Home Owners Dig Out.

We're transitioning from being held back by a vicious circle of home related financing and activity into a virtuous cycle which will help propel us forward as an economy.

As is housing, consumer confidence and consumer spending are both on the mend.

It even 'smells' to me like the government knows best gang may finally be getting serious about addressing our huge financial issues in a responsible long term manner.

If so, what a needed and nice surprise that would be.

Greater economic growth and more jobs are on the way.

That's my take.

Thanks. Bob.