Housing Options Most Bleak for Seniors as Mortgage Debt Rises

The state of the nation’s housing appears dismal overall, but the outlook is even more bleak for older homeowners, new research shows. 

The nation’s homeownership rate fell to 64.5% last year, erasing nearly all of the increase in the previous two decades, according to the latest report by Harvard University’s Joint Center for Housing Studies (JCHS). “The State of the Nation’s Housing” provides an annual assessment of the housing outlook, and summarizes trends in economics and demographics. 

The mortgage crisis that severely impacted the housing market may have left both lenders and consumers with “PTSD,” said Paul Weech, president and CEO of NeighborWorks America during a JCHS webcast Wednesday to discuss the report’s findings.

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And while those who do own homes continued to pare down their mortgage debt in 2014, older homeowners are one group for which high mortgage debt is still a concern because “they are entering their retirement years with declining incomes,” JCHS said in the report.

More than a third (38%) of owners aged 65 and over had mortgages in 2013, up from a little over a quarter in 2001, data show.

“Moreover, the median amount of debt they carried doubled over this period in real terms,” JCHS said. At the same time, the real median equity of older owners in 2013 was down to $125,000—lower than in any year since 1998.

“Having less equity and large mortgage payments late in life is a troubling prospect for households on fixed incomes,” JCHS said.

The aging baby boomers will lift the number of older households aged 65 and over 42 percent by 2025, and double the number aged 80 and over by 2035, data show.

“A large majority will likely remain in their single-family homes for the time being, implying lower turnover in the housing market and higher spending on remodeling of existing homes,” JCHS said. “For those seniors that choose to age in place, rising debt and wealth constraints may leave many retired homeowners struggling to meet their mortgage payments.”

Access the report here.

Written by Cassandra Dowell

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  • This report seems to fly in the face of what NRMLA reported in saying: “‘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.” (See http://reversemortgagedaily.com/2015/06/18/senior-home-equity-nears-4-trillion-peak/ )

    So who is right? There is one important question to ask, who gains more by what each has reported?

  • The_Cynic brings up some very good points, who does gain the most by what each has reported. I have to say that NRMLA takes a much more optimistic view with their statistics.

    However, we must also be realists. The housing situation in this country is a problem. More are finding themselves not qualifying for mortgage loans and I am not just talking about seniors.

    I am more inclined to go more with NRMLA from what other statistics I have checked on, not all the way but more than what the report in the article states.

    We have a growing problem in this country and we have to face it head on. Average income’s are declining, prices are rising and taxes are going up on the Federal Level, state levels, city and county levels, for most part all over the country! This in itself does not help the retiree on a fixed income that owns a home.

    Their are bright spots, the HECM can help many senors out of this economic up side down cake! We have over 8,000 seniors turning 62 years of age every day, their is a tremendous amount of equity built up in their homes, if nothing else because of the pure numbers of seniors turning 62 years old.

    Sure, the FA ruling will not help a certain amount of seniors out, where at one time the RM could have. The good news is that we have more of a senior population that owns a home today than ever before in the history of this country!!

    Be prepared, we will be seeing more and more doom and gloom coming out in the news media and from the CFPB, all of it is not true but hype, we know the truth. I see our industry as the saving grace for many senior home owners, we just can’t allow the extreme left to discourage us, we are the saviors, the missionaries, take that approach and we will be the winners, 100%

    John A. Smaldone

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