Reverse mortgage marketing is a growth opportunity for mortgage loan officers who want to tap into the growing home equity wealth of baby boomers. This article examines five economic and demographic trends that combine to create a powerful force for increased origination of Home Equity Conversion Mortgages (HECM) and other proprietary reverse mortgage products.
Trend #1: Baby Boomers are Getting Older
The aging of the baby boomer generation is a leading demographic trend, with 10,000 boomers turning 65 every day until 2029. Born between 1946 and 1964, the approximately 73 million boomer cohort is tipping the U.S. into an older age category.
The number of Americans aged 65 and over is projected to more than double from 46 million in 2015 to 98 million in 2060, according to the U.S. Population Reference Bureau. As a percent of the total population, the 65+ age category will grow from 15 percent of the total U.S. population in 2016 to 23.4 percent by 2060. The number of older adults in the U.S. is expected to exceed the number of children for the first time in the country’s history by 2034.
The oldest baby boomers (born in 1946) are 76 as of 2022. While baby boomers are the major segment of aging Americans, the number of even older adults will also be growing. Seniors ages 85 and older will increase from 6 million in 2015 to almost 20 million by 2060. The number of centenarians (age 100 and older) could reach 600,000 by 2060 if increases in healthcare and life expectancy continue.
Mortgage brokers are getting older too! As they look at current market conditions and explore opportunities for growth, they realize that their own aging coincides with the market growth in home equity conversion mortgages (HECM).
Baby boomer mortgage brokers have a good understanding of reverse mortgage marketing. They can offer borrower’s an in-depth understanding of the pros and cons of a reverse mortgage versus a traditional mortgage if they are properly trained in state and federal compliance requirements for reverse mortgages.
Trend #2: Baby Boomer Homebuyers and Sellers
Boomers were on the move in the 12 months ending in July 2021, representing the largest number of home sellers from a generational perspective with 42 percent of the market according to a report by the National Association of REALTORS®. This was broken down into sales by younger boomers (23 percent) and older boomers (19 percent). On the buy side, younger boomers represented 17 percent of total purchasers, and older baby boomers accounted for 12 percent of purchasers for a total of 29 percent of the market.
See our related article: Baby Boomer Homeowners are on the Move
Trend #3: Escalating Home Values
Homeowners nationwide, including baby boomers, are sitting on an unprecedented level of home equity. In the third quarter of 2021 alone, homeowner equity increased by 31 percent from the year earlier period. This translates to $3.2 trillion of new wealth, according to the real estate analytics firm CoreLogic. On an individual basis, this is equivalent to a gain of $56,700 per borrower.
Reverse Mortgage Daily reported in January 2022 that homeowners ages 62 and above – the starting age for a reverse mortgage – collectively held $10.19 trillion in residential real estate. This data is based on research by the National Reverse Mortgage Lenders Association (NRMLA) and the data analytics firm RiskSpan. See the report, “Senior Housing Wealth Tops $10 Trillion for the First Time.”
As baby boomers looking at the rising value of their homes, using a reverse mortgage to tap into this increased equity can be an important part of financial planning for retirement.
Trend #4: Boomers Are Retiring Faster
In the pre-COVID years of 2008 to 2019, about 1 million older Americans ages 55 and above retired every year. That changed significantly during COVID when 3.5 million Americans in that age range retired during 2020 and 2021, according to the Pew Research Center.
The majority of U.S. adults (50.3 percent) ages 55 and older reported being retired from the workforce in the third quarter of 2021, up from 48.1 percent before the pandemic.
Read the Pew Research Center article titled, “Amid the Pandemic, a Rising Share of Older U.S. Adults Are Now Retired.”
As these retired workers struggle to protect inadequate levels of savings needed to finance them in their older age, the option to draw equity from their home can be an attractive option.
Trend #5: Aging in Place
Baby boomers hold the largest portion of real estate wealth among all age groups, according to a New York Times analysis of Federal Reserve data. In 2021 this amounted to 44.1 percent of real estate wealth held by baby boomers (born between 1946 and 1964), compared to 31.2 percent owned by Gen X members (born 1965 to 1980) and 11.2 percent owned by Millennials (born 1981 to 1996).
Read the New York Times article titled, “Baby Boomers: Rich with Real Estate and Not Letting Go.”
Along with this high level of home ownership comes a desire to “age in place,” meaning boomers want to enjoy their current home for as long as possible and avoid the trauma that comes with moving. According to AARP studies, 77 percent of adults age 50 and older want to stay in their homes as long as possible.
Reverse Mortgage Marketing Services
Sixty Five Plus Marketing, Inc. is ready to launch your baby boomer marketing campaign in as little as 1 to 2 weeks. Contact president Margaret Grisdela by phone at 561-330-7289 or via email for a free marketing consultation to get started.
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You will save time and money because Sixty Five Plus Marketing, Inc. gives you immediate access to experienced marketing professionals who get right to work as your outsourced marketing department.
Imagine what you can do with more time and money to focus on your day-to-day sales operations and long-term growth strategy! Contact Margaret Grisdela via email or at 561-330-7289 for more information.
Baby Boomer Homeowners are On the Move