Housing market stalls amid recovery

2/19/2014 1:46:28 PM

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Five years after President Barack Obama signed into law the American Recovery and Reinvestment Act of 2009, many of the housing programsintended to help American homeowners have proven to be successful for millions.

Recovery programs find success
In a recent report, the Department of Urban Housing and Development revealed that the relief provided through the legislation created new jobs, prevented more foreclosures and increased energy efficiency in the housing market. Three cities that received large amounts of federal aid to alleviate the housing crisis were Miami, Denver and Columbus, Ohio - three areas that were severely impacted by the recession.

Through the HUD's Neighborhood Stabilization Program, $2 billion was given to some of the neighborhoods that were hit the hardest by the recession. The program purchased and redeveloped thousands of foreclosed properties and abandoned homes. According to HUD, the program created 25,100 temporary jobs and has completed half of its projects to date. Fewer foreclosed and abandoned homes will help the overall housing market recovery, as this inventory can have a negative impact on area property values.

In addition, the act included homelessness prevention initiatives, including $1.5 billion for 1.3 million families and individuals who were struggling. The Homelessness Prevention and Rapid Re-Housing Program provided immediate relief to those who were left homeless by the recession. The program has been very successful, with 87 percent of those finding permanent housing upon exiting the program.

In the final cornerstone of the housing act, the federal aid aimed to improve energy efficiency in the housing market. The Public Housing Capital Fund allocated $4 billion to increase the energy efficiency in the nation's public housing buildings and therefore reduce utility expenses for families. The thousands of units that received energy upgrades are expected to save 27 percent on utility bills. The HUD report revealed that to date, the updated buildings are saving about 20 percent, which adds up to millions of dollars saved. 

2014 homebuyers
Five years down the road, the success of these programs have given relief to millions of American families and homeowners, but the road to recovery is still not complete.

In a separate report by Redfin, the rate of home purchases appears to be slowing in the first few months of 2014. According to the report, the number of new homebuyers grew 8 percent in the first six weeks of the year, a dismal figure compared to the 51 percent increase seen during the same time period in 2013. In addition, the number of mortgage applications was significantly lower than it was a year ago and sales were at their lowest pace in four years.

Redfin attributes the decline in homebuyers to rising home prices and increased mortgage rates, which have decreased affordability for many Americans. While it is typical for the housing market to slow down during the winter months, the freezing weather has apparently not been the main deterrent, according to Redfin. 

Fortunately, home prices are expected to continue growing in 2014, but at a much slower pace than in 2013. For potential homebuyers, this means that there is a greater chance of finding a new home this year.

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgage options.