San Diego Reverse Mortgage: High Values and an Aging Population Converge
Reverse mortgages can grow in a certain region if the right variables are present. Two key variables are a growing senior population and healthy property values. San Diego has both of these, especially with the aging trends shown in the recent census.
The census showed that citizens age 65 and over constitute 13.4% of the U.S. population, a record high. This growth of the senior portion of the population is being called the largest demographic shift in history. Over the past decade, the senior population grew 15.1% nationwide, but grew 23.5% in the West, meaning that region is leading the demographic shift. California already is the state with the largest number of senior residents, with 4.2 million. It is estimated that by the year 2030, those 65+ will number 72 million and constitute almost 20% of the population.
Inside California, a good example of these changes to the population is San Diego. The median age of San Diegans is getting higher, and the continuing addition of baby boomers will strengthen this trend, where the senior population grows faster than other parts of the population. The census anticipates that from 2000 to 2030 the 60-plus crowd in San Diego county will grow by 130%, while the area’s general population will grow by only 38%.
The reverse mortgage is restricted to seniors age 62 and above, and its popularity has grown, just as the senior population itself has grown. President Ronald Reagan signed the reverse mortgage into law in February 1988, and its purpose was to let seniors have access to the equity in their homes without having to make payments on the loan. The loan allows the balance to grow over time in lieu of payments. This is the opposite, or “reverse” of a regular forward loan, which requires monthly payments and where the balance decreases month by month.
This program had a pretty slow start, as it took the lending industry a while to understand it and for the public in general to become aware of it. There were 6637 loans created in 2000, with a dollar volume of $827M. This grew to 114,641 loans in 2009, with a dollar volume of $30.2 billion. Understandable by demographics, California and Florida have been vying with each other for the most reverse mortgages originated each year, with California having a wide lead in the overall number of reverse mortgages originated.
But a large concentration of seniors is not the only reason a reverse mortgage (also known as a Home Equity Conversion Mortgage or HECM) may grow in a given region. Also important is the value of homes. The higher the value of the home, the more the borrower can receive, and thus the attraction of the program grows.
But there’s a limit to the value factor as well. The FHA will allow a maximum value of $625,500. The median value of homes in San Diego is about $300,000, which is far more attractive for this loan than the national median value of $125,000, but doesn’t go too high. San Diego is thus a prime location for HECMs. It participates in the West’s aging population and has “just right” home values for making a large impact on a borrower’s cash flow. It is fitting that the reverse volume of September 2011 in San Diego was an increase of more than 11% over that of September 2010.
For more complete advice about reverse mortgages, advice that is accurate and objective, you should visit the Reverse Mortgage Educator. This is also the place to get individual help with a San Diego reverse mortgage.