Magazine article Mortgage Banking

Timing

Magazine article Mortgage Banking

Timing

Article excerpt

As equity is rapidly draining from the housing market, many baby boomers and current seniors must be wondering what to do about their retirement funding. Until now, it looked as though long-time homeowners were pretty well set, with plenty of housing equity to draw upon as a supplement to other sources of old-age income. Unfortunately, it's not that simple anymore. And those "other sources of old-age income" aren't looking that pretty, either.

When one looks at markets skewed toward older populations, the concerns get even more serious. Think Florida and Arizona, for example. Our Home-Price Spotlight data provided by First American CoreLogic shows that Florida's home prices have declined by 41.17 percent, on average, from their peak in September 2006. Similarly, Arizona home prices have declined by 43.08 percent since their peak in July 2006. If you live in either of those states and you were thinking about tapping your equity to finance health care or other old-age expenses, that plan suddenly got a lot more complicated.

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There is certainly time for home prices to recover--and they will. But one has to question whether home prices will return anywhere close to the wild elevations of recent boom years during the lifetimes of the average boomer. And for longtime homeowners who did cash out refinancings of their homes at peak values--some are now underwater on those mortgages, which is certainly not helpful if you are staring at retirement. …

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