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TheStreet Open House

Feeling Good About Housing, With Old Mortgages Being the Buzzkill

NEW YORK ( TheStreet) -- At long last, U.S. homeowners are seeing a real rise in the value of their homes, five years after the housing market collapsed and millions of Americans saw their most valuable financial asset plummet in value.

That was then and this is now, with two sets of new numbers framing the story.

According to the National Association of Realtors, home prices are up in 88% of U.S. metropolitan areas. Home prices also saw the strongest year-over-year growth rates since 2006, the NAR reports.

All in all, the median U.S. home price rose 10% from 2011 to last year, to $172,000 from $162,000. That translates into good times, at least as it pertain to 2006-12, for the domestic real estate market.

"Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years," says Lawrence Yun, chief economist at the NAR. "Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates. Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play."

Another good barometer of real estate health is the state of home mortgage delinquencies.

TransUnion is out this week with numbers on that front showing the national mortgage delinquency rate (which the firm defines as the rate of borrowers 60 or more days past due) in decline for the fourth straight quarter.

The U.S. mortgage delinquency rate fell from 5.41% in the third quarter of 2012 to 5.19% in Q4 of last year. On a year-to-year basis, the national mortgage delinquency rate is down 14% from 2011.

Why the still historically high numbers on mortgage delinquencies? TransUnion says it's complicated, but by and large, while fewer new homeowners are paying bills late, older mortgage-holders are propping up higher delinquency rates.

"The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels," says Tim Martin, group vice president of U.S. housing at TransUnion. "For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well. The elevated delinquency levels that we still are experiencing are a result of older vintage loans -- borrowers who haven't been making their payments for a rather long time that are still in the system, inflating the overall rate."

The "glass half-full" outlook shows improvements on all mortgage payment fronts, however.

But here is the "glass half-empty" story -- TransUnion analysts say the outlook for declining mortgage delinquencies is apparent, with a "continue downward trend" in early 2013, albeit at a "muted" pace.

"The declines in the mortgage delinquency rate will likely be muted for the foreseeable future, as the foreclosure process in some states can take more than 1,000 days," Martin says. "It's not clear yet, but recently announced regulatory rules related to mortgage servicing may tend to slow down this process further. What is clear from the data TransUnion collects is that, until the old vintages work through the system, we expect the delinquency rate to remain elevated."

Even so, the big picture for the U.S. housing market is one of recovery, after a half-decade of misery. And that's worth raising a glass over.

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