Even
homeowners
who
have
paid
off
their
mortgage
may
be
finding
that
their
available
equity
is
not
enough
to
downsize,

according
to
a
story
published
Saturday
by
The
New
York
Times.
The
article
also
notes
that
reverse
mortgages
are
a
potentially
valuable
tool
for
seniors
in
the
current
housing
environment.

Roughly
80%
of
older
adults
live
in
the
homes
they
own,
but
housing
costs
and
interest
rates
have
combined
to
create
a
challenging
scenario
for
some
older
people
seeking
to
downsize
into
a
more
manageable
home.
The
prices
for
smaller
townhouses
or
condominiums
can,
in
some
cases,
outweigh
the
prices
for

larger
single-family
homes.

“[T]he
traditional
notion
that
a
house
with
a
paid-off
mortgage
can
serve
as
an
A.T.M.
to
help
fund
retirement
living
is
shifting,
economists
report.
Homeownership
no
longer
is
an
unqualified
benefit
for
some
seniors,”
the
story
explained.

Urban
Institute
research
economist
Linna
Zhu
rhetorically
asked
if
seniors
were
“aging
in
place,
or
stuck
in
place.” 

According
to
data
from


Harvard
University’s

Joint
Center
for
Housing
Studies
(JCHS),
the
share
of
older
adults
carrying
mortgage
debt
rose
significantly
between
1989
and
2022,
going
from
24%
to
41%.
During
that
same
period,
the
typical
amount
owed
on
these
mortgages
rose
from
$21,000
to
$110,000.

These
larger
mortgage
balances,
combined
with
elevated
interest
rates,
have
made
impacted
seniors
“cost-burdened,”

according
to
2023
data
from
the
JCHS,
meaning
they
spend
at
least
30%
of
their
income
on
housing
costs.

But
with
rising
home
prices
have
also
come
higher
levels
of
home
equity,
which
recently
led


Boston
College’s

Center
for
Retirement
Research
(CRR)
to

reduce
“its
estimate
of
the
proportion
of
American
households
at
risk
of
being
unable
to
maintain
their
standard
of
living
after
retirement,”
the
Times
reported.

The
CRR’s
so-called
“retirement
risk
index”
fell
to
39%
in
2022,
down
from
47%
in
2019.
The
organization
“bases
its
calculations
on
older
homeowners
tapping
their
home
equity
with
reverse
mortgages,”
the
Times
explained.

A
profiled
couple
obtained
a
Home
Equity
Conversion
Mortgage
(HECM)
sponsored
by
the


Federal
Housing
Administration
(FHA)
in
2020,
which
allowed
them
to
“pay
off
their
existing
mortgage,
afford
cataract
surgery
and
complicated
dentistry
(neither
one
was
covered
by
Medicare,
in
this
instance),
replace
a
22-year-old
car
and
upgrade
their
plumbing,
all
while
keeping
their
retirement
savings
intact,”
the
Times
stated.

Zhu
of
the
Urban
Institute
told
the
Times
that
reverse
mortgages
are
“a
very
effective
way
to
tap
home
equity,”
but
product
adoption
by
seniors
—
as
is
true
with
many
equity-tapping
options
—
remains
low.

Housing
researcher
Jennifer
Molinsky
noted
that
home
equity
is
seen
as
“a
nest
egg”
for
those
in
later
life,
but
many
seniors
are
hesitant
to
tap
it
as
a
financial
resource.
Instead,
many
seniors
see
it
as
more
of
an
emergency
resource,
only
to
be
tapped
when
no
other
options
exist.

“Besides,
accessing
home
equity
isn’t
always
simple
or
possible,”
the
Times
stated.
“With
federally
insured
reverse
mortgages
—
officially
[HECMs]
—
the
upfront
costs
are
high
[…]
and
the
paperwork
substantial.
In
2022,
only
64,500
older
applicants
received
reverse
mortgages
through
the
federal
program.”

One
researcher
said
that
the
situations
of
older
adults
could
be
bettered
by
“improving
and
streamlining
the
federal
HECM
program,
broadening
the
criteria
for
refinancing
and
[home
equity
line
of
credit
(HELOC)]
loans,
and
encouraging
the
development
of
more
housing,
including
homes
and
apartments
suitable
for
older
buyers
and
tenants.”

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