Older Americans Finding More Equity in Their Homes

equity-house In the past few years, millions of homeowners across the country have been able to enjoy positive equity on their homes for the first time as a result of rising prices and falling debt, and this is certainly true of those who are 62 years old or more.

The amount of equity held by homeowners within this demographic has risen in each of the last four quarters and now stands at the highest point seen since 2009, according to the latest National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index. In all, the index now stands at a rating of 154.95, up from 145.67 in the same period a year earlier and 152.59 from the final three months of 2012.

Altogether, equity for this demographic rose 6.4 percent on an annual basis to $3.25 trillion, thanks in large part to rising home prices, the report said. The total value of homes owned by those 62 years old or more now stands at about $4.32 trillion, up from $4.14 trillion year over year and $4.28 trillion on a quarterly basis. Meanwhile, mortgage debt for these older borrowers slipped to $1.07 trillion from $1.09 trillion and $1.08 trillion in the same period last year and the previous quarter, respectively. That’s also down from the all-time high of $1.14 trillion in the third quarter of 2010.

However, the housing market’s recovery hasn’t brought these older borrowers back to where they were prior to its initial downturn, the report said. In the fourth quarter of 2006, equity stood at $4 trillion, and currently, home values of 12.7 percent below where they were at that time, while equity is still down 19 percent. On the other hand, current equity is still well above the $2.1 trillion observed in the first quarter of 2000.

At the same time, though, equity continues to improve for all age groups, the report said. Currently, equity nationwide totals $6.94 trillion, up 29 percent from 2000, and the highest number since the second quarter of 2008.

Rising home values nationwide are likely to help millions more homeowners find positive equity in the coming months, and perhaps into next year as well. However, many experts believe that prices will actually improve at a rate slower than those observed in the recent past, likely due to the fact that those already observed may have been unsustainably high.

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