The collective housing wealth for homeowners at or over the age of 62 fell for the second consecutive quarter in Q1 2023, only the second time a drop has been recorded in more than a decade. This is according to the Reverse Mortgage Market Index (RMMI), the latest such release from the National Reverse Mortgage Lenders Association (NRMLA) and data analytics firm RiskSpan.
The RMMI decreased in Q1 2023 to 406.52 from a level of 433.25 in Q4 2022. The decline was largely driven by a reduction in seniors’ home values according to NRMLA and RiskSpan, which fell 1.3% or $185 billion.
While the historic increases in senior-held home equity seen over the last few years have abated for now, that doesn’t take away from the potential utility of a reverse mortgage according to Steve Irwin, president of NRMLA.
“Regardless of these latest numbers, reverse mortgages remain an essential component for addressing a huge problem for many Americans—funding retirement,” Irwin said. “More than 1.3 million families have used a reverse mortgage alongside their 401Ks, IRAs, savings, investments, Social Security, Medicare, and Medicaid to cover life’s daily expenses, so they can live more financially secure lives. As with all major financial decisions, a reverse mortgage should be part of an overall strategic plan, with input from knowledgeable professionals, and family members who may be impacted.”
Up until recently, senior-held home equity and home price appreciation have seen historic gains in recent years. Growth has been softer in recent months when compared to 2021 and early 2022, and while the RMMI recorded an increase as recently as Q3 2022, that increase was softer than what had been seen recently due to pandemic-driven home price appreciation.
Despite the recent downward trend, the RMMI has risen precipitously between 2011 and 2021. When it endured a decline in 2011, the collective figure sat at roughly $3 trillion while in Q3 2021, the RMMI index rose by 4%, topping $10 trillion for the first time, while the index grew by 3.98% in Q4 2021. The RMMI grew by 4.91% during Q1 2022 — when it first topped $11 trillion. In Q2 2022, the RMMI grew by 4.10%.
The collective senior housing wealth figure reached a threshold of over $9 trillion for the first time in July 2021, and $8 trillion for the first time in April 2021. It had previously topped $7 trillion for the first time in March 2019.