Emerging Cohort Trends in Housing Debt and Home Equity

W05-1: Several roles that housing plays in the household economics of homeowners have begun to fundamentally change during the past decade. Cohorts approaching retirement now and in the future will typically carry substantial mortgage debt into old age, a trend in marked contrast to cohorts that preceded them in the age structure. While married couples have the higher housing debt, unmarried owners lag married couples in home equity accumulation. In the future, elderly cohorts facing a downturn in annual income will be more motivated to tap into their home equity, both by borrowing against equity for those who stay in their homes and by liquidating some equity and downsizing for those who choose to move. Unmarried owners will have fewer options to do either. Rising mortgage debt in old age will also likely reinforce the recent trend toward increasing labor force participation beyond the age of eligibility for social security…