This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Underwater Homeowners Can See Sunlight in 2014

NEW YORK (TheStreet) -- In the first 10 days of 2014, we've looked at the real estate market here and here. But let's put the capper on the jug with one last piece of good news heading into the year.

The trend is this: More and more Americans are seeing the value of their homes rise, which further stabilizes the housing market and gives Americans more confidence in their personal financial situations.

The supporting data come from RealtyTrac. It reports that only 9.3 million U.S. homes were "deeply underwater" at the end of 2013, down from 10.7 million in September. In percentage terms, only 19% of all U.S. homes were underwater in December, compared with 23% last September. (RealtyTrac defines "deeply underwater" as properties with loan to value ratios of 125% or above, meaning the homeowner owed at least 25% more than the estimated market value of the property.)

Those numbers were also way down from the underwater peak of 12.8 million homes in May 2012. That suggests the housing market is on an upward swing heading into 2014, and significantly so.

"During the housing downturn we saw a downward spiral of falling home prices resulting in rising negative equity, which in turn put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss," says Daren Blomquist, vice president at RealtyTrac. "Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event."

That scenario should help the real estate sector gain more momentum this year, as RealtyTrac points out that fewer underwater mortgages translates into a "shot in the arm" for the housing market in 2014.

Still, with more than 9 million homeowners struggling with underwater properties, the housing sector isn't out of the woods yet.

"There are still millions of homeowners who are in such a deep equity hole that it will take years for them to regain their equity," Blomquist says. "The longer these homeowners remain in a negative equity position without relief in the form of a principal loan balance reduction, the more likely that foreclosure will become the path of least resistance for them."

RealtyTrac says Nevada, Florida and Illinois hold the most properties underwater, while Hawaii, New York, California and Montana lead the list of states where homeowners are emerging fastest.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,957.55 -25.04 -0.15%
S&P 500 1,976.58 -2.33 -0.12%
NASDAQ 4,454.7750 +9.8660 0.22%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs