Cincinnati's housing problems started in 2002, a full five years before the rest of the country, when distressed mortgages topped the national average. But according to a report Wednesday by the Department of Housing and Urban Development that spotlights the Cincinnati market, the fragile area is finally starting to show signs of improvement with the help of government programs.

While Cincinnati did not see the same rapid appreciation of the housing price bubble as much of the rest of the country, local house prices still fell below 2000 levels. The declining values were fueled partly by excess housing construction in the years leading up to the crisis, but mostly by growing defaults that were driven by unsustainable mortgages and boosted by the economic downturn and rising unemployment.

Economic conditions in the area are still rough. There are high concentrations of distressed mortgages, large numbers of vacant homes and nearly one fourth of Cincinnati mortgages are underwater.

Vacant homes have been one of the most daunting problems. From 2000 to 2010, new housing production exceeded household growth in Cincinnati, according to the U.S. Bureau of the Census. Annual housing unit growth at 1%, was higher than population and household growth rates of .6% and .7% respectively.

This added to a glut of vacant homes in the Cincinnati market. According to the Census Bureau, the number of vacant homes increased by an average of 3,300 or 6.1% annually during the 2000s, higher than the national rate of 4.4% during the same time.

Subprime borrowing also increased substantially during that time. According to the data, by 2005, one in every seven borrowers had subprime mortgage.

All of this led to a sluggish housing market much earlier than the rest of the country. Home prices in the area rose at one quarter the national averages between 2000 and mid-2006. Prices then fell from the remainder of 2006 to the end of the housing bubble by 18%.

Prices in the area are now what they were at the beginning of 2000. Without distressed properties, prices would be at 2003 levels, equal with the rest of the country.

The administration launched assistance programs in the area in April 2009. From that time through March 2012, nearly 34,000 mortgage assistance interventions have been offered, and 20,000 of those were through the Home Affordable Modification Program and the Federal Housing Administration loss mitigation and early delinquency intervention programs. An estimated 14,000 proprietary mortgage modification were offered through private companies participating in the HOPE Now Alliance program.

This number of modifications was nearly double the number of foreclosures completed (17,900) during the period.

Additional funding of $52.7 million was also dedicated to tearing down vacant properties, boosting nonprofits dedicated to sustaining home ownership, rescue payment assistance, mortgage payment assistance and lien-elimination assistance.