Many baby boomers who once thought their homes would provide needed wealth in the retirement years are thinking twice now. Foreclosure and delinquency rates among the boomer crowd having been rising, according to a new study from the AARP, suggesting many seniors will have to find new sources of income in their later years.
The study, entitled “Nightmare on Main Street: Older Americans and the Mortgage Market Crisis,” found that as of 2011 roughly 600,000 homeowners aged 50 or older were in foreclosure. That adds up to a total of 1.5 million borrowers losing their homes since the housing bubble popped in 2007. There were also 625,000 in 2011 in the over-50 age group that were behind on their mortgage payments by three months or more. And 3.5 million baby boomers are currently underwater, owing more than their homes are worth.
This is a particularly tough situation for many retired baby boomers as they are now on fixed incomes and without the ability to cash out equity in their homes or sell them, these borrowers are finding themselves strapped for cash.
“Usually, even when budgets are tight, people can get by, but the super- inflationary cost of living we’ve seen in the last five years have meant that a lot of people need to sell their properties to survive,” said George Roddy, foreclosure expert and president of Foreclosure Listing Service in Dallas in a FoxBusiness article. “The problem is if they’re underwater or behind on their mortgage, they simply can’t sell their homes.”
Among those boomers who are in foreclosure, the AARP study found that 53 percent of them were in the middle-income bracket, earning between $50,000 and $124,999. The next biggest chunk (32%) came from those incomes below $50,000.
“The housing market crisis is far from over,” the AARP report concluded. “…The increases in mortgage borrowing and foreclosures indicate that many older homeowners have been relying on their home equity to finance their needs in retirement and may be running out of options.”