“Dog bites man” has been a leading theme as we head toward 2013. By that, we mean we continually report on improving home prices; to the point where home prices are almost no longer longer news.

We say “almost,” because after years of reporting on falling prices, we still have a ways to go on the upside to balance the scales.

The latest price data from S&P/Case-Shiller added more weight to the rising-price side. Case-Shiller's data show home prices edged up 0.9% month-over-month in August for 19 of the 20 cities it follows. Case-Shiller's data continue to affirm the positive price-trend data issued by other popular pricing providers, such as Zillow, Fiserv, and CoreLogic.

Speaking of CoreLogic, its latest data release shows continued improvement in distressed properties. CoreLogic reports that completed foreclosures posted at 57,000 in September, down from 83,000 a year earlier and slightly lower than the 59,000 foreclosures reported in August. Improved pricing and greater demand, which have enabled more short sales, are allowing more underwater borrowers to escape their obligation without foreclosure.

The downward trend in foreclosures, along with a gradual clearing of the shadow inventory and rising home price, leave little doubt that we are in the midst of wide-spread housing recovery.

Of course, ulta-low mortgage lending rates have aided the recovery in no small measure. Rates today continue to hold their lows (though they haven't been setting new lows lately).

Today, the concern, if not the lament, among housing-market participants is credit availability. Last week, we reported on the Mortgage Bankers Association lament that too many qualified borrowers are not getting their loan. Overly strict lending standards, in short, are retarding the speed of the housing recovery.

Most of us know that credit availability is a chief concern among first-time home buyers, many of whom lack strong credit scores or large down payments. This segment usually constitutes 45% of the overall home-buying market, but today it's down to 32%, according to the National Association of Realtors.

There is still too much uncertainty in the market for lenders to venture farther out on the risk curve. Impending new regulations have lenders understandably nervous. The new regulations will determine risk held by lenders, as well as down payment required for borrowers.

To be sure, we need to balance regulation with access to credit, but that's a fine balancing act. What's more, it's not a constant act. The system must be sufficiently flexible to meet market demand.

The good news is that the purse strings show signs of loosening. A recent survey by the Federal Reserve shows that banks, on net, are reporting easing lending standards. (The survey encompasses all forms of credit, not just mortgage.)

We think we will see a less restrictive mortgage market in 2013. Economic growth and job creation are expected to improve next year. An improving economy leads to more liberal lending policies and more accommodating regulation.

Courtesy of Jessica Regan.

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