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The Growing Population Of Senior And Its Impact To The San Diego Reverse Mortgage
The recognition of the reverse mortgage in a certain region depends upon the presence of a significant senior population and a concentration of fairly valuable real estate property. San Diego has both, and is an example of wide demographic shifts as uncovered in the 2010 census. It's no surprise that San Diego reverse mortgage volume has been growing!
The newest census revealed that people age 65 and over constitute 13.4% of the United States population, a record high. This progress of the senior percentage of the population is being called the biggest demographic shift in history. Over the past decade, the senior population grew up to 15.1% countrywide, yet grew 23.5% in the West, which means that region is leading the demographic shift. California already is the state with the largest number of senior residents, with 4.2 million, followed by Florida with 3.3 million. It is projected that by the year 2030, those 65 will number 72 million and comprise almost 20% of the population.
Within California, San Diego further exemplifies these demographics. The median age is increasing in San Diego and is expected to continue to increase even more as the baby boomers grow older. The senior population is not only growing, it is growing at a much faster speed than the total population in the county. The census forecasted that from 2000 to 2030 the 60-plus population of San Diego county will grow by 130%, and the 65-plus population will grow at the same rate, while the county population as a whole will just have a 38% increase.
The reverse mortgage program started out in 1988 and is only available to those age 62 and older. There had been 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 one another for the most reverse mortgages done each year, with California having a broad lead in the overall number of reverse mortgages originated.
But an aging population is not the only factor in identifying if a Home Equity Conversion Mortgage (the program's more technical name), or HECM, will take hold in a particular region. Home value is critical. Especially because the borrower can only get a portion of the value, depending on the age of the youngest borrower, the loan becomes more attractive as the value of the home grows and the size of the loan proceeds thus grows up.
However, the home values can't be too high either. The highest value FHA will recognize for purposes of the loan is $625,500. San Diego's median home value is about $300,000, something of a Goldilocks median value (just right), and definitely more generally attractive for loan purposes than the median value of homes across US, which is about $125,000. This makes San Diego a prime contender for reverse mortgages, being part of the West's aging demographic as well as having the kind of property values where this sort of loan can make a big impact on a borrower's finances. In fact, the San Diego reverse mortgage volume of September 2011 was a year over year increase of more than 11% from September 2010.
Chances are the San Diego reverse mortgage volume will only continue to increase, especially if, in addition to aging and value factors, the economy continues to provide challenges to seniors.
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