Homeowner Age and House Price Appreciation

Do the houses of elderly homeowners appreciate at the same rate as the average house in their local market? As the population ages and retirees plan their financial future, homeowners need to project accurately the value of their single largest asset their house. The federal government is also concerned about the financial welfare of its elderly citizens and the solvency of the insurance for reverse mortgages. Using Health and Retirement Study data, we find that the houses of elderly (75 years old or older) homeowners appreciate 1 percentage point less per year in real terms than the houses of middle-aged (50 to 74 years old) homeowners. These estimates are smaller than the findings of Davidoff (2004), who used the American Housing Survey to show a 3-percentage-point slower house appreciation rate for homeowners aged 75 or older relative to that of all other homeowners. Using census microdata in nonlongitudinal form (1990 and 2000), we find 2.4-percentage-point slower real house appreciation for elderly homeowners. Houses of elderly homeowners thus appreciate in real terms at a 1- to 3-percentage-point discount relative to their local markets