Housing wealth among people ages 62 and over hit a record $7.14 trillion in the first quarter, according to new data from the National Reverse Mortgage Lenders Association and RiskSpan, growing $104 billion during the time period – or 2.7 percent.
The increase in housing wealth was propelled by a $110 billion rise in seniors’ home values, alongside an increase in the senior population.
Home equity can increase as home values appreciate, or as people repay loans.
At a time when many Americans are struggling to save for retirement, the National Reverse Mortgage Lenders Association president said rising home equity levels could help seniors live out their later years more comfortably.
“Reverse mortgages have become an essential component for addressing a huge problem for many Americans: funding retirement,” Peter Bell said in a statement. “More than 1.12 million families have used a reverse mortgage alongside side their 401(k)s, IRAs, savings, investments, Social Security, Medicare and Medicaid to cover life’s daily expenses, so they could live more financially secure lives.”
A reverse mortgage is a loan available to older Americans, allowing them to convert their accumulated home wealth into cash that can be used for a variety of purposes –and it can commonly supplement retirement savings. The borrower does not have to pay the loan back until they leave the home.
While senior housing wealth is rising, U.S. home values dropped for the second consecutive month in May, according to the most recent data from real estate website Zillow. The average U.S. home is worth $226,800.
Meanwhile, new home sales dropped to a five-month low in May, to an annualized pace of 626,000. That drop came despite a decline in mortgage rates.