For millions of homeowners, steadily rising home prices in 2013 meant they could finally get their heads above water. According to a recent survey, 3.9 million borrowers gained enough equity in their homes that they no longer owe more on their mortgage than the home is worth.
Although 9.8 million borrowers are still underwater with negative equity in their homes, the rising tide of prices should continue to lift more homeowners into positive equity.
According to CoreLogic, home values improved by 12 percent from January 2013 to January 2014. States with the highest price jumps include some of the same markets with high rates of negative equity, including Las Vegas and parts of California.
Not enough equity to earn a profit
One of the barriers to an improving housing market is lack of homes for sale. This is partly because there aren't enough homeowners who can afford to sell, even as their home equity improves. Homeowners with 20 percent or less equity, estimated at more than a third of borrowers, wouldn't be able to sell their homes for enough profit to pay expenses and buy another one.
Economists polled by The Associated Press say they expect home price growth to slow a bit, predicting a 5 percent increase in the coming year. Meanwhile, mortgage rates haven't moved much so far this year. The latest Bankrate survey of large lenders shows the 30-year fixed mortgage rate at 4.48 percent, down 1 basis point from a week earlier.
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