The Reverse Mortgage Market Index (RMMI) has reported a decline in collective housing wealth for senior homeowners aged 62 and over in Q4 of 2022. This is the first time in over a decade that such a drop has been recorded. The decline in the RMMI was attributed to the decrease in senior-held home equity from $12.42T in Q3 of 2022 to $12.39T in Q4 of 2022, as senior home debt increased by $30bn while home values remained relatively stable due to the cooling of the housing market.
According to Steve Irwin, the President of NRMLA, while many housing markets are experiencing a decrease in home values, it is worth noting that senior homeowners still possess $12.39 trillion in housing wealth that can be utilized effectively to bolster retirement security.
Although senior-held home equity and home price appreciation have generally continued to rise, growth has been softer in recent months when compared to 2021 and early 2022. According to the RMMI, the increase in Q3 of 2022 was softer than what had been seen recently, rising by 4%, which topped $10 trillion for the first time.
Home price appreciation is also slowing down across the national housing market. However, there are still home price elements that indicate positive momentum, with pent-up homebuyer demand responding well to lower rates in many markets, even in the West, leading to a solid monthly gain in home prices in February 2023.
While the decline in collective housing wealth for senior homeowners is a cause for concern, it should be noted that senior homeowners are still holding a significant amount of housing wealth. The decline is largely attributed to the cooling of the housing market, which is affecting the broader mortgage industry as well. Nonetheless, homeowners aged 62 and over should explore all options available to them to enhance their retirement security, including the strategic use of their housing wealth.