Senior Home Equity Nears $4 Trillion Peak

The estimated aggregate value of home equity owned by seniors is just under $4 trillion, positioning it 1% below its peak level of $4 trillion in the fourth quarter of 2006, data show.

In the first quarter of 2015 the estimated aggregate value of seniors’  home equity was $3.96 trillion, according to the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index (RMMI). The first quarter of 2015 is the twelfth consecutive quarter in which the index has risen.

Driving the rising amount of equity in seniors’ homes is their home value and the declining amount of senior-held mortgage debt.

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“The $63.5 billion increase in senior home equity in the first quarter was fueled by an estimated $61.6 billion increase in the aggregate value of senior housing and a $1.9 billion decline in senior-held mortgage debt,” NRMLA said in a statement.

RMMI, a quarterly measure which analyzes trends in the home values, home equity, and mortgage debt of homeowners 62 and older, has reached 189.67, its highest level since the first quarter of 2007, data show. The RMMI increased 1.6% from the fourth quarter of 2014 when the index stood at 186.63.

“As the economy recovers and the amount of housing wealth held by older homeowners continues to grow, home equity is an increasingly valuable resource America’s seniors can use to help fund their longevity,” said NRMLA President Peter Bell.

The current senior equity levels represent a 34% recovery since the post-Recession trough reached in the second quarter of 2011, when senior equity levels had fallen to an estimated $3 trillion, notes NRMLA.

The senior housing value estimate is based on the Federal Housing Finance Agency’s first quarter of 2015 all-transactions Indices. 

Written by Cassandra Dowell

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  • The gross numbers could be rather meaningless if the growth in values is principally due to the gross home values of the net increase in the population 62 since 2006 offsetting the losses in the home values of the population who were already 62 back in 2006. These kinds of stats are rather meaningless without considerably more information.

    On the hand seeing that balances due on liens against the homes of over 62 are dropping in total is both surprising and encouraging.

  • The opportunities we have are endless. Especially when you look now at the amount of equity the senior home owners have in their homes nationally. Also, don’t forget the amount of baby boomers turning 62 years old daily. The varied statistics show approximately 8,000 baby boomers are turning 62 years of age daily and many are homeowners. Wow, how can you beat those statistics to work with?

    I grant you, we have had a lot of changes over the past couple of years, especially the Financial Assessment (FA) ruling that is now in effect.

    All this means is that all of us must continually need to be educated on these changes. We also must look at other markets, such as, higher priced properties, working more with the community bankers and credit unions, eorking with financial planners and long term health care providers and more.

    We now have a real opportunity to use the HECM as a true financial planning and retirement tool!

    I do not mean we should abandon those in critical need of the HECM, on the contrary. However, we must also realize many of the homeowners we have tried to help in the past, will be more difficult with the FA ruling in effect.

    Embrace the changes with open arms, then go out and take advantage what is available to us all!!

    John A. Smaldone

    • John,

      The number of Baby Boomers turning 62 is much closer to10,000 a day on average. Since the first Baby Boomer turned 62 on 1/1/2008, we have not seen our endorsement numbers move up substantially at all.

      While fiscal 2009 was our best year for endorsements, it was not much better than 2008 which was not much better than 2007. Now that after 6 and one-half years of Baby Boomers turning 62, our endorsement numbers are way down despite over 21 million (low estimate) Baby Boomers turning 62 in that period. In a little over six months the very oldest Baby Boomers will be turning 70 and yet our endorsement numbers are not even 50% of what they were in fiscal 2009.

      We have heard this line about Baby Boomers bumping up endorsements for years yet there is absolutely NO evidence of that being the case at all! Unfortunately it sounds great and seems rational but as of yet, it demonstrates how gullible we are in this industry since so much time has passed with NO evidence of their positive impact on endorsement numbers. AND for the next two fiscal years, things will not get much better and most likely even worse.

      By the way I jumped on this idea over 10 years ago and stayed on it until about two years ago when I could no longer justify it due to inconvenient facts. So for almost 8 years I am as guilty as anyone in promoting this concept which has now been proven to be entirely false. So while the aging of Baby Boomers is adding to our potential base they are not growing out our endorsement numbers at all.

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