Homeowners aged 62 and older saw their collective housing wealth increase in Q1 2021 by 3.4% compared to the previous quarter. This constitutes an increase of approximately $305 billion to a record of $9.23 trillion, according to data provided by the National Reverse Mortgage Lenders Association (NRMLA) in conjunction with data analytics firm RiskSpan.
The increase was reported Thursday in the quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), according to a press release by NRMLA.
The RMMI rose in Q1 2021 to 322.89, which marks another consecutive all-time high since the index’s original publication in 2000. That increase was described as being primarily driven by an estimated 3% (or $329 billion) increase in the values of homes owned by seniors. This was offset, however, by a 1.2% (or $23.9 billion) increase of senior-held mortgage debt.
The increase in the RMMI occurred primarily due to the updating of applicable data sources used for estimating the size of the 62+ homeowner cohort — along with senior home values — by using the 2019 American Community Survey (ACS). The data source for estimating senior loan-to-value (LTV) levels was updated using the 2016 Survey of Consumer Finances, according to RMMI based on the press release.
“New research from Fidelity forecasts the average 65-year-old couple will spend $300,000 on healthcare in retirement, while single women will spend $157,000 and single men $143,000,” says NRMLA President Steve Irwin in the announcement of the new data. “As the Baby Boomer generation grows older, and the strain on government resources tightens, the strategic use of home equity can help retirees cope with these potential challenges.”
Year-over-year, the RMMI figure increased by 8.3% in 2020, outpacing previous years of change including 2019 (5.4%) and 2018 (6.3%), which is believed to be due to higher levels of home price appreciation seen in 2020. NRMLA President Steve Irwin emphasized that the increased value of homes owned by seniors could make a reverse mortgage option worth new consideration, according to the last quarterly release of the RMMI in April, which saw senior housing wealth top $8 trillion for the first time.
Senior housing wealth topped $7 trillion for the first time ever according to a previous RMMI data release in March 2019. It then continued to increase, reaching $7.23 trillion in April 2020, $7.54 trillion in June, $7.70 trillion in October and $7.82 trillion in January, 2021.
While 2020’s year-over-year increase is an improvement, it did not quite manage to match the 8.4% increase recorded in 2017, but did slightly best the 8.2% increase in 2016.