"The CEO of Meredith Whitney Advisory Group, whose prediction of the Great Financial Crisis earned her the moniker "Oracle of Wall Street," pointed out in a Financial Times op-ed that more than 54% of homes are owned by seniors, up from 44% in 2008. She added that 79% of seniors own their homes, and three-fourths of them don't have a mortgage, meaning they have an enormous amount of equity that can help cover rising homeownership costs, such as insurance."
""This has made it easier for seniors to hold on to their homes by tapping into some of this built-up equity," Whitney explained. "And growth in such funding will be a major theme for the US economy in the next three to four years." The cheapest and fastest-growing form of consumer debt is now home equity lines of credit, demonstrating how much housing has become a financial resource, and seniors account for 41% of revolving home equity credit outstanding, she said."
"The upshot is that housing inventory will remain limited as boomers are less inclined to downsize to smaller homes and have the financial means to stay put. "That means the housing market will continue to be very different from before. There will be no quick fixes," Whitney warned. "Even as 30-year mortgage rates decline, don't expect existing home sales to pick up materially. Seniors control the proverbial chessboard, and with so many options, they aren't moving anytime soon.""
Baby boomers now own more than 54% of U.S. homes, up from 44% in 2008. Seventy-nine percent of seniors own their homes and three-fourths are mortgage-free, creating substantial built-up equity. Homeowners increasingly draw on that equity, with home equity lines of credit the fastest-growing form of consumer debt; seniors hold 41% of revolving home equity credit. Additional debt products allow homeowners to extract cash, reducing incentive to downsize. Limited housing inventory and sustained senior retention of homes will constrain existing home sales and keep the housing market tight for several years, hindering first-time buyers.
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