Hello, LOs!
Yesterday I wrote about how dispiriting the housing market is right now for the average first-time homebuyer. Today, let's talk about the other side of that: the equity-rich boomers.
As longtime readers may remember, my boomer parents decamped suburban New York City last summer for Raleigh, North Carolina. They sold their 1950s-era ranch-style home in New Jersey for more than double what they bought it for in 1995. Armed with cash, they were able to out-muscle a dozen other buyers for a cookie-cutter home in a new development that was priced around $420,000.
Like a lot of boomers, my parents have already made their big housing move and would prefer to age in place. As they near retirement, they'll be faced with the prospect of increased medical expenses and a fixed income. Maybe they'll need to tap the equity in their home at some point to pay for life expenses, or renovate for safety reasons.
There's a lot of potential homeowners who fall into this camp – the Census Bureau found that between 2010 and 2020, the 65-and-older population grew by over a third (34.2%, or 13.8 million).
Some LOs are staying clear of would-be first-time homebuyers to focus on the seasoned veterans.
"I have not done a first-time homebuyer in over two years," said Melinda Hipp, an LO in San Antonio, Texas. "Why? Because I saw this market coming and chose to ONLY work with those who had money....the Baby Boomers. There is not enough focus in the media on this demographic (except saying we are 'older'). The Baby Boomers have money and, yes, they are relocating and UPsizing in droves. Californians are upsizing to Arizona. Arizonans are upsizing to Texas, etc, etc. I plan on upsizing in retirement with a HECM for Purchase loan and get a nice lot on a nicer golf course and custom design my own home. Not bigger, just nicer."
Hipp said that while the whole mortgage industry can't focus on reverse, there's not nearly enough knowledge out there on the products. She noted that borrowers can purchase a home with a Home Equity Conversion Mortgage and that FHA allows home values up to $970,000 and jumbos up to $4 million.
"Let's move the Baby Boomers out of their smaller homes and free up some homes for first timers!" she said.
LOs – what do you think about all this? Are you thinking about how to work with boomers? What's your strategy? Let me know by emailing me at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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