Senior homeowners gained $329B equity in Q1 but price growth is slowing

Owning a home as part of a mix of assets in retirement continues to offer good levels of value appreciation for American seniors, although smaller gains could be ahead.

Senior home equity rose almost $329 billion in the first quarter of 2024 according to new data from the National Reverse Mortgage Lenders Association, taking the total equity in homes owned by seniors across the US to more than $13 trillion.  

A separate report recently revealed that the average homeowner with a mortgage added $28K to their equity over a year.

The NRMLA/RiskSpan Reverse Mortgage Market Index gained in the quarter and senior home value reached an all-time high of $15.5 trillion in the quarter, while senior mortgage debt increased by $10.2 billion to $2.35 trillion.

“The FHA Home Equity Conversion Mortgage, which more than 1.3 million people have used to supplement retirement savings and to age in place, enables older homeowners to convert their housing wealth into a liquid asset safely and sustainably,” said NRMLA President Steve Irwin. “Reverse mortgages support everyday expenses, home downsizing or modification for better senior living, caregiving and uncovered healthcare, health emergencies, drug expenses, adult children’s needs, transportation, and participation in organizations and activities that enable older adults to sustain social engagement and avoid loneliness.”

PRICE GAINS SLOWDOWN

However, seniors along with other American homeowners are facing a slower rise in home price appreciation.

A new reading of the CoreLogic Home Price Index shows that home prices posted a 4.9% year-over-year gain in May, the lowest rate of appreciation recorded since October 2023. Monthly stats reveal a pace of 0.6% following four months of larger gains and below pre-pandemic levels.

Across the states there was a wide range of price gains on an annual basis, from 0.9% in Louisiana and Texas to 12% in New Hampshire.

“While national annual home price growth continues to slow as anticipated, cooling appreciation over the past months is now observed in more markets, as the surge in mortgage rates this spring caused both slowing homebuyer demand and prices,” said Dr. Selma Hepp, chief economist for CoreLogic. “However, persistently stronger home price gains this spring continue in markets where inventory is well below pre-pandemic levels, such as those in the Northeast.”

The Midwest and other more affordable markets have also seen strong price gains while those with significant increase in inventory including Florida and Texas have seen deceleration.