Markets & Economy

Boomers’ home equity has repercussions for millennial buyers

Be careful: Reverses have a place, but it’s a far narrower window than the usual
  • We already knew that US home equity has risen a ton since rock bottom in 2009.
  • The Fed’s Z.1, B.101 shows aggregate home equity growing from $6.6 trillion to $12.4 trillion by fall 2015.
  • The component of a home appreciating over time is the land that it sits on. Not the house, which only depreciates.

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Last week, the National Reverse Mortgage Lenders Association (NRMLA) reported that American seniors held $5.76 trillion in home equity at the end of the third quarter of 2015 -- which, according to NRMLA, "rocketed the NRMLA/RiskSpan Reverse Mortgage Market Index to an all-time high of 200.19," according to a release sent by the company. Because the source for the data is NRMLA, we should be careful. Reverses have a place, but it’s a far narrower window than the usual everybody-should-have-one ideology common to reverse salespeople. Reverses work best if you’re old -- 75, but 80 is better -- if you won’t outlive the benefit, if you have no heirs, if you can’t or won’t downsize ... a whole bunch of cautions. The equity data should not be a surprise, but it is interesting. We already knew that US home equity has risen a ton since rock bottom in 2009. The Fed’s Z.1, B.101 shows aggregate home equity growing from $6.6 trillion to $12.4 trillion by fall 2015. Them ain...