Home Values for Seniors on the Rise

You might not know it, but there’s an index that tracks the average value of homes owned by Americans 65 and over — and it’s most recent reading skews upward. Here’s why Grandma and Grandpa might be smiling this week.

The index comes from Golden Gateway Financial, specifically from its Reverse Mortgage index that tracks home values for older Americans.

In the past seven quarters, home values for U.S. seniors have either been flat or in decline, Golden Gate reports. But that skid ended in the third quarter of 2009, as home values for older Americans rose from $369,762 to $381,895 in the fourth quarter of 2009.

Seniors who reside in states that were hit particularly hard during the Great Recession may not share in the good news. Golden Gate’s study says that homeowners in Florida, Texas and New York saw a “significant decline” in their home values. But senior homeowners in “flyover country” (in states like Kansas, Iowa and Nebraska) saw significant upticks in their homes.

Obviously, that’s good news for many older Americans who may rely on the value of their homes to help fund a comfortable retirement. Says Eric Bachman, chief executive officer at Golden Gate, "Even a minimal gain in home value is a reassuring sign for older Americans because many of these individuals live on a fixed income and rely on their home to support their retirement lifestyle."

Some specific data from the Golden Gate index includes:

  • Self-reported senior home values rose by a little more than 3% between the third and fourth quarter of 2009.
  • The average existing forward mortgage debt dropped slightly to $143,360.
  • Statistically, home values for seniors are low compared to Golden Gateway’s figures from 2008 levels. The average value of home in 2009 was just $390,328, down from $437,496 in 2008.

The Golden Gate report is good news for U.S. seniors either approaching retirement or who are already in retirement. With retirement portfolios in decline during the past two years, an uptick in home values gives older Americans another cash-out option as they sail into their golden years, either by selling the house outright or by turning to a reverse mortgage, where the payout increases as the value of the home increases.

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