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.

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...