Home upkeep and maintenance can be a time-consuming and costly endeavor, but it is vital to preserving the value of a home and mitigating unexpected expenses. Older adults typically can no longer take care of basic home maintenance (think: cleaning gutter, shoveling snow), and they often don’t have the liquidity to replace a roof before it leaks. Homeowners can expect to pay 1-4% of their home's value on an annual basis to keep up with repairs - a figure that for older homeowners on a fixed income can be difficult.
Homeowners can lose
~10%
of their home's value if they do not maintain their homes.
Source: The Mortgage reports, 2018
Source: The Mortgage reports, 2018
What if there was a simple way for older adults to access the equity in their homes for home repairs, maintenance, and support for daily living? Reverse mortgages have the right intent, but their execution needs modernizing, in part to overcome the stigma of the product in the marketplace. Imagine a new product that enables families to preserve the value of homes, keep older adults independent, and ensure a valuable asset can be passed down to the next generation.
let's build…
A new financial product that enables older adults to invest their home equity into upkeep and safely aging at home.
Key features
- This product offers a protected, limited way for customers to take equity out of their home’s value and apply it towards a network of home maintenance and aging in place services.
- The balance of customers’ home equity is protected for future generations—and any home maintenance can help increase the value of their home.
- Customers get access to a vetted, trusted, set of critical services with specialized expertise in home upkeep and aging in place: contractors who know how to adapt and maintain homes, in-home caregivers, and a dedicated property manager.
- When a customer no longer lives in their home, their family that inherits the property can choose to pay back the value of the services, or sell the home and use a percentage of the proceeds to pay for the services used.
THE BUSINESS OPPORTUNITY
- When tested with consumers, this new “protected home equity” product has a potential annual market of ~$2-3B as new product revenue.
- ~1-2M older adults have expressed interest in buying this new “protected home equity” product.
- Offering this product could open up acquisition channels for companies to reach both the older adult and their adult children through a single product, thus building generational trust in a company’s brand and product offerings.
of caregivers said “protected hold equity” would be useful for the older adult they care for.
Source: 5,000-person consumer survey, based on this description.
what we heard
Both older adult and adult children report that this “protected home equity” product would be helpful and to provide peace of mind.
Adult children, in particular, proved to be an important target demographic as they help loved ones evaluate this new product. They are motivated by helping their loved ones age in place safely and also preserving the value of their home.
% of caregivers (adult children) interested in “protected home equity”
Source: 5,000-person consumer survey, June 2023
“Absolutely, I would use this service. We currently pay for maintenance and upkeep on our home because neither of us is "handy." Additionally, the home health care (the more expansive the better), is exactly what I want when I get to the point of needing it.”
ray, 70
Retired veteran who hopes to age in his home as long as possible
how to get started
Older adults are often living in their largest asset, and need to maintain it to preserve its value. Accessing home equity for home upkeep or to offset costs of aging makes for a compelling offer. The most critical barrier is overcoming public perception of reverse mortgages, which some may associate with predatory lending practices. Stricter regulation around reverse mortgages have helped make the industry more transparent, but can make it more costly to be compliant.
Considerations:
1
Develop a brand story that builds trust.
Avoid the perception that this is a standard reverse mortgage and show the distinctiveness of this product that protects users. Forefront key features that highlights the interest of the user and how this is a product that is meant for both older adult and their adult children.
2
Partner with trusted institutions to build credibility.
Build partnerships that will bring credibility to the product—at a macro level (think: AARP) and at a smaller level with the networks of service providers for home maintenance and at-home care. Brand halos from these partnerships will create the appeal and networks necessary to drive adoption.
3
Offer flexible payment options to users.
Try to sell the bundle of elder care-related services independently from the payment model, with negotiated discounts at “in-network” service providers. Offer older adults two payment choices upfront - home equity or direct payment.
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