The Home Equity Conversion Mortgage (HECM) for Purchase (H4P) program has been struggling to gain wider acceptance in the reverse mortgage industry for years, despite seeing a slight uptick in usage this year, according to data shared by Federal Housing Administration (FHA) officials earlier this year.
But the continuing housing affordability challenges across the country could be an opportunity for H4P, since older homebuyers generally — and repeat homebuyers with equity especially — are making up a larger portion of home-buying activity, according to data from the National Association of Realtors (NAR).
The typical ages of both first-time and repeat home buyers declined slightly in 2023, but remains elevated in the post-COVID, high-inflation and high-interest-rate environments.
The age of the average first-time home buyer in 2023 was 35 years old, while the average age of a repeat home buyer was 58 years old this year, according to NAR. This is down slightly from the all-time highs of 2022, but remains higher than prior years.
Data analysis from Axios using NAR research also found that the median age of homebuyers has risen to 49 over the past two decades, according to NAR transaction data between July 2022 to June 2023.
Housing affordability challenges have also pushed the average income of homebuyers higher, the data found.
“Given the erosion of housing affordability due to higher home prices and mortgage rates, the household income for those who successfully purchased homes jumped by nearly $20,000 and topped six figures for only the second time in our records,” said Jessica Lautz, NAR deputy chief economist and VP of research.
“In a still-competitive housing market, more well-off homebuyers were able to have their bids accepted by offering larger down payments and even by paying cash,” she added.
The affordability crisis has made the typical borrower profile older and more affluent, Lautz told Axios.
“We are pushing out anyone who may be looking for an affordable property,” she said.
The phenomenon of an aging America has also increasingly changed the composition of homes with children, the data found.
“Seventy percent of recent buyers did not have a child under the age of 18 in their home, the highest share recorded,” NAR said. “By comparison, in 1985, 42% of households did not have a child under the age of 18. Fifty-nine percent of recent buyers were married couples – the lowest share since 2010 – while single female (19%) and single male (10%) buyers increased.”
Fourteen percent of homebuyers purchased a home for a multi-generational family, primarily to take care of their aging parents or to accommodate people at or over the age of 18 moving back home.
Sensing an opportunity around H4P, some lenders have bolstered their reverse mortgage divisions specifically around the under-used product.
Earlier this year, Fairway Independent Mortgage Corporation awarded Roxanne Hellickson with an H4P certification, while its former H4P business development manager Tane Cabe now leads the company’s reverse mortgage division.
The new head of Guaranteed Rate‘s reverse mortgage division also shared a desire to bolster purchase business, and FHA recently announced a new seller credit for the H4P program that drew audible cheers from the audience at a recent reverse mortgage industry conference.
