The National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index fell by 0.3% between the third and fourth quarters of 2010 as senior's home equity levels fell by $11 billion during the period.
The index is now at 157.7, which is down 18% from its peak set in the fourth quarter 2006. At that time, seniors held over $4 trillion in home equity. As of Dec. 31, 2010, that was down to $3.3 trillion.
However, the impact of falling home prices on the total amount of home equity held by the senior population has been partially offset by the growth of the number of older Americans and their lower levels of mortgage debt owed relative to the rest of the U.S. population.
NRMLA points to the fact that senior home equity is only down 18% its peak, while for the total population of homeowners, equity has been reduced by 31%.
“This data shows us that the home equity is still an important component of total wealth for seniors. As such, this equity will be increasingly important to help seniors fund longevity as they outlive the generations before them,” said Peter Bell, NRMLA president.
RiskSpan's analysis of Federal Housing Finance Agency and Census Bureau data found the aggregate value of senior housing fell by $15 billion to $4.3 trillion; this was offset by a $4 billion reduction in senior debt owned, leading to a $11 billion reduction in the of senior home equity.
