Housing Still Precarious in Obama’s Second Term

The housing market is on the slow road to recovery. Home prices in the last three months rose in 120 out of 149 metropolitan markets surveyed by the National Association of Realtors.

Compare that to just 39 rising metros a year ago. The median home price is up 7.6 percent from a year ago, the strongest year-over-year increase since the first quarter of 2006.

Much of that is due to the shift in sales away from distressed properties, as lenders modify more loans and in some case write down mortgage principal.

The one thing standing in the way of a more robust housing recovery, is tight credit. Mortgage rates are at near-historic lows, but too many potential home buyers still cannot access these rates due to damaged credit.

"Mortgage-dependent buyers are still only bit-part players in the U.S. housing market recovery," writes Ed Stansfield of Capital Economics.

So how does a second Obama term play into this still fragile housing market?

"The President's victory is broadly positive for mortgage insurers and broadly negative for banks and homebuilders," writes Jaret Seiberg, Senior Policy Analyst at Guggenhiem Partners.

Household formation is coming back, which is great news for the nation's home builders, if they can obtain the financing they need to build and if their potential buyers can as well. That's where the fiscal cliff comes in and the fear of another recession.

"The National Association of Home Builders urges President Obama and congressional leaders to work together to resolve issues related to the 'fiscal cliff' by extending all of the 2001 and 2003 tax cuts while being mindful of how broad-based tax reform will affect the fledgling housing recovery," wrote NAHB chairman Barry Rutenberg in a release Wednesday.

Since housing finance barely came up during the campaign, and President Obama never gave voters any kind of vision about the future of mortgage lending, according to Seiberg, Fannie Mae and Freddie Mac will likely remain unchanged/unreformed through the mid-term elections in 2015.