Overall, home equity has been steadily rising since negative equity peaked in 2009. CoreLogic’s latest Negative Equity Report, which covers up to Q3 last year, found that the total number of homes nationwide with negative equity was 3.2 million, which is 26 percent lower than the 2009 peak number.
One particular group that has benefited from home price appreciation creating equity over the last few years is the age 62 and up crowd. The National Reverse Mortgage Lenders Association (NRMLA) reported that this group’s aggregate amount of home equity rose by $152 billion, or 2.6 percent, in the third quarter last year.
The gains in senior home equity, driven primarily by an increase in home values, brought the total amount of home equity for those 62 and older up to $6.1 trillion, according to NRMLA.
The Q3 increase in home equity among seniors also caused the quarterly RMLA/RiskSpan Reverse Mortgage Market Index (RMMI) to rise up to 217.34, the highest level in the 17-year history of the index.
“The upward trajectory of the RMMI tells us that housing wealth continues to provide senior homeowners with a financial resource they can use to support their needs during their retirement years when income is dependent on Social Security, investment assets, and pensions,” said NRMLA President and CEO Peter Bell. “The positive trend is also reassuring for homeowners nearing retirement age who are less likely than their predecessors to leave the workplace with a defined benefit plan and also more likely to have long-term debt.”
The Harvard Joint Center for Housing Studies (JCHS) recently published a report stating that the housing wealth seniors are gaining can provide a “valuable safety net,” for older households needing financial help, since 29 percent of households age 50 to 64 will retire without a traditional pension (the percentage is 49 percent for households 65 and over). According to the JCHS, a report from George Washington University School found that more than half (60 percent) of those nearing retirement (age 51 to 61) have one source of long-term debt, and a quarter of them have multiple sources.