Dive Brief:
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Combined home equity for owners age 62 and older rose 3.1% to $6.13 trillion during Q1 2017, according to the National Reverse Mortgage Lenders Association, driven by the current environment of rising home prices.
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The NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) found that a $199.3 billion increase in the value of this group’s homes was a key driver in retiree owners’ housing wealth. The RMMI, which measures how much home equity older owners hold on a quarterly basis, jumped to 227.07 during the quarter to its highest level since its initial publication in 2000.
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Older homeowners prefer to stay in their homes as they age, and so they are using the home equity they’ve built to pay for modifications to suit their accessibility needs.
Dive Insight:
As the baby boomer generation ages, homebuilders and remodelers will have plenty of opportunities to create new and upgrade existing real estate to addresses their clients’ changing mobility needs.
By 2035, one third of every U.S. household will be headed by someone over the age of 65, according to the Joint Center for Housing Studies of Harvard University. Of that figure, 16.2 million (11%) households will be headed by someone who is at least 80 years old.
Longer expected lifespans are one driver of this trend. Another factor is the growing number of adults living at home, as opposed to a retirement facility, as they age. In 1990, 10.2% of adults 75 years or older lived in a nursing facility; in 2015, just 4.9% did so, according to the JCHS
In response, builders are developing smaller units and more accessible communities that have built-in or easy access to social activities and other resources. A forthcoming Jimmy Buffet-themed active-adult community is one example of this effort.
Meanwhile, remodelers are fielding more requests for aging-in-place design. Eighty percent of remodeling firms said they had such work in Q4 2016, up 12 percentage points from three years prior, according to the National Association of Home Builders. That figure stands to increase, as 56% of all residential remodeling spending by 2025 will be driven by the those ages 55 and up, the JCHS found. So far, less than 4% of single-family homes include three key accessible design features: single-level plans, wide hallways and flush entrance thresholds.
Seniors who opt to remodel consider the bathroom and entrances or stairways as the highest priorities, according to Home Advisor.