Homeowners aged 62 and older controlled $6.42 trillion in home equity at the end of the second quarter, according to the most recent Reverse Mortgage Market Index report.
That figure represents a $150 billion increase from the previous quarter, or a gain of 2.4% from the $6.27 trillion recorded in the first quarter of 2017. The National Reverse Mortgage Lenders Association, which developed the index in conjunction with the Arlington, Va.-based data analytics firm RiskSpan, identified a $162 billion jump in senior home values as the major driver of the equity increase.
The proprietary index, which NRMLA and RiskSpan developed in 2000, takes into account changes in seniors’ home equity and mortgage debt, indexing the result against a baseline figure from March 2000, the first month it was recorded. In the second quarter of 2017, the index sat at 230.17, a record high according to NRMLA and RiskSpan.
NRMLA president and CEO Peter Bell framed the rise in home equity as a potential solution to older Americans’ long-term health care costs.
“There is little doubt that healthcare spending per person will continue to increase. This is a particularly sobering fact for older Americans who can expect to spend between $200,000 to $400,000 out of pocket for medical expenses during retirement,” Bell said in a statement announcing the results.
“Housing wealth provides older homeowners with an available source of funds to manage the costs of caregiving and other expenses incurred in the last third of life,” Bell said.
The index has remained on a prolonged upward swing since the nation emerged from the recession at the beginning of this decade; the value has risen in each quarter since the end of 2010.
The news comes a few weeks after real estate research firm CoreLogic reported average home-equity gains of $13,000 per homeowner between the second quarters of 2016 and 2017, with the biggest gains coming from Western states. CoreLogic pegged the total amount of homeowner equity at more than $8 trillion.
Written by Alex Spanko