Following a rise to an all-time high in the second quarter, senior-held home equity saw a modest decline in the third quarter and endured a more severe drop in the fourth quarter.
Homeowners 62 and older saw their collective home equity levels drop by 1% in Q4 2024 to a total of $13.95 trillion. That’s according to the latest edition of the Reverse Mortgage Market Index (RMMI), a quarterly report compiled by the National Reverse Mortgage Lenders Association (NRMLA) in conjunction with data analytics firm RiskSpan.
After peaking at a high point of $14.09 trillion in the second quarter of last year, senior-held home equity dropped 0.3% in Q3 2024 before falling an additional 1% in Q4. The decline was attributed to an 0.7% (or $118 billion) reduction in home values that was accompanied by an 0.9% (or $21.1 billion) increase in senior-held mortgage debt.
NRMLA highlighted RiskSpan’s note that home equity levels in the fourth quarter correspond with a normal seasonal downturn in home sales during the winter months.
Despite the reduction, the total potential value in exploring home equity-based financing products has not diminished, according to NMRLA President Steve Irwin.
“A new study from the Center for Retirement Research at Boston College estimates that 30% of Americans would consider using their home equity to pay for future long-term care needs,” Irwin said. “This is encouraging news. The cost of getting in-home care can be significant, even for those who have planned retirement as best as they could.”
The RMMI data diverges from a December estimate from Freddie Mac, which showed that home equity held specifically by the baby boomer generation could be as much as $17 trillion, or roughly half of all U.S. home equity. This estimate was derived from Federal Reserve data.
Still, on a year-over-year basis, collective senior-held home equity has risen. In Q4 2023, the level stood at $12.84 trillion, according to the RMMI report released in March 2024.
