potential, according to the NRMLA/RiskSpan Reverse
Mortgage Market Index (RMMI), which measures senior home equity
. In the third quarter of 2014, the RMMI rose to its highest level since the third quarter of 2007.
The index finished the period at 183.87. A $94.6 billion increase in senior home equity in the third quarter was driven by an estimated $97.8 billion increase in the aggregate value of senior housing offset by a $3.2 billion increase in mortgage debt held by seniors.
The third quarter of 2014 was the tenth consecutive quarter in which the index has risen, and the $3.84 trillion estimated aggregate value of home equity owned by seniors eligible for reverse mortgages
is now just 4% below its peak level of $4.0 trillion in Q4 2006.
The current levels represent a 30% recovery since the financial crisis when seniors’ equity levels had fallen to an estimated $3 trillion. The senior housing value estimate is based on the Federal Housing Finance Agency’s Q3 2014 all-transactions indices, which showed quarter-over-quarter increases in housing values for 82% of the 412 metropolitan statistical areas covered by RiskSpan.
According to a report by The Demand Institute, most Baby Boomers plan to age in place. The generation will account for nearly one in every four dollars spent on housing in the next five years.
The report, Baby Boomers & Their Homes: On Their Own Terms
– released by The Demand Institute, a non-advocacy, nonprofit think tank– doesn't expect this generation to stick to the script when it comes to retirement and housing decisions. The research, which surveyed more than 4,000 Boomer households (ages 50-69), revealed that few Baby Boomers have intentions of downsizing or moving to warmer climates far from their families.
"During the financial crisis, Baby Boomers saw their wealth drop dramatically. While many have been forced to adapt their retirement and housing plans to new financial realities, they haven't abandoned those plans entirely," said Louise Keely, president of The Demand Institute. "For the most part, they are still retiring in their mid-sixties and staying in their homes. They value strong family relationships; they want to be near their children and grandchildren. Additionally, many Boomers maintain plans to upsize their homes."
The report also showed Baby Boomers are carrying much more mortgage debt than earlier generations at this life stage. Even so, most of the generation who will purchase homes plan to use mortgage financing, like reverse mortgages, to do so, and in contrast to Millennials, the majority is confident in their ability to qualify for financing.
Senior citizens have more equity in their homes than at any period since the financial crisis, giving rise to