Older adults might now have a little extra spending power when looking for new senior housing.
Homeowners ages 62 and older saw their home equity rise to $6.3 trillion in the first quarter of 2017, up from $6.13 trillion in the fourth quarter of 2016 and the highest its been since at least 2000, according to a new report from the National Reverse Mortgage Lenders Association (NRMLA).
Growth in housing wealth for retirement-aged homeowners was driven by a $199.3 billion improvement in senior home values and offset by a 0.6% increase of senior-held mortgage debt equaling $9.2 billion, the Washington, D.C.-based trade group said.
Additionally, the NRMLA/RiskSpan Reverse Mortgage Market Index, a quarterly measurement of home equity held by older homeowners, rose to 227.07 in Q1 2017, another all-time high since the index was first published in 2000.
Developed with the Tysons Corner, Virginia-based research firm RiskSpan, the RMMI tracks equity by subtracting the amount of mortgage debt held by Americans aged 62 and older from their associated home values, then indexing the result against the baseline amount of 62+ equity in March 2000, when seniors held just $2.38 trillion in home equity.
Seniors’ home equity has risen steadily since the middle of 2011, when the housing crisis and Great Recession began to ease.
Many older adults sell their homes or take out reverse mortgages when moving into a senior living community. In theory, the more equity seniors hold, the more money they might have to spend on senior housing.
Written by Tim Regan