Four Niches YOU NEED
to MARKET to RIGHT NOW

by Angela Rose, Editorial Manager, In Touch Today Corporation

If you are not already marketing to potential first time homebuyers, you could be missing out on doubling your closed loans each month! According to the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, first time homebuyers reached the highest market share on record this year (2009). First timers bought forty-seven percent of homes purchased, the highest percentage since 1981.

Why has this market grown to such an exciting extent? NAR vice president of research, Paul Bishop, was recently quoted thanking several factors for the increase in first time buyers. “Tax incentives, record high affordability conditions and a pent-up demand brought a record share of first-time home buyers into the market.”

As you likely know, the tax credit for first time buyers has been extended into 2010. First timers who sign a contract by April 30 and close on a home by June 30, 2010, may be eligible for a tax credit (on their 2009 or 2010 income taxes) of up to $8000. This is a huge incentive.

Add the one-time tax credit to the other yearly tax benefits of having a mortgage, and the incentive becomes even better. According to a study on the tax benefits of home ownership posted on housingeconomics.com, a household with $80,000 in annual income obtaining a $200,000 mortgage will save on average $1,765 on their taxes in the first year of homeownership. By the end of the average term of ownership (twelve years, according to the study), the tax savings will equal $19,488.

On the subject of increased affordability, record low interest rates, lower asking prices and opportunities for lower down payments (as with an FHA loan), have made buying a home less costly than ever seen in this decade. However, with all the negative real estate news in the media, the message of good news to the first time buyer market gets a bit lost. This presents a perfect opportunity for you to present yourself to this market as a knowledgeable expert.

The new tax credit for repeat homebuyers has recently increased the viability of this market. Repeat buyers who have lived in their home consecutively for at least five of the last eight years may be eligible for a tax credit of up to $6500 when they sign a contract by April 30 and close by June 30, 2010 on their next home.

According to the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, the typical repeat buyer is forty-eight years old, earns $88,100, purchases a home costing $224,500 and plans to stay in that home for 12 years. The purchase price limit on the new repeat buyer tax credit is $800,000, so it should lend itself nicely to the folks who are looking to move up.

Think about this - the new tax credit for repeat homebuyers is also perfect for older folks who are ready to retire (or have already retired) and want to downsize. There are a lot of them out there!

According to The State of the Nation’s Housing, published by The Joint Center for Housing Studies, “as the leading edge of the baby-boom generation reaches age 65, demand for retirement housing will rise. Increased longevity among those born before World War II will also lift demand for assisted living facilities.”

Newsweek recently reported that, “The battered housing market is getting some help from an unlikely source: retirees. Baby boomers on the cusp of collecting Social Security are bringing some much-needed vitality to the real-estate sector as they capitalize on reduced prices and low mortgage rates by lining up their next homes a few years early.”

Another way you can tap the senior market is through reverse mortgages. They have become increasingly popular. According to the National Reverse Mortgage Lenders Association (NRMLA), 114,692 Reverse Mortgage HECM loans were approved in the 2009 fiscal year. According to the AARP, “Since 1961, 350,000 reverse mortgages have been financed. Two thirds of that total has occurred in the last four years.”

Also according to NRMLA, “Today, over 34 million Americans are over age 65. This is expected to double in the next 30 years to almost 70 million. By 2030, 20 percent of Americans will be over age 65. Almost four out of five seniors own their own homes, meaning there are about 27 million senior homeowners today, and that number will rise in the future. Seniors of all races have the highest rates of homeownership.”

While reverse mortgages used to be seen as last resort for seniors with unexpected expenses, they are increasingly viewed as an acceptable option for those desiring to supplement their fixed incomes and stay out of nursing facilities. According to the National Council on Aging, “More than 13 million Americans can use reverse mortgages to pay for long-term care expenses at home. In this way, many can stay independent and live in their homes longer.”

You might think that falling home values would be in issue with a product that needs to draw upon equity, However, Moneyrates.com recently reported in July 2009, “House prices have declined steeply over the past couple years, no doubt, leaving twenty-one percent of homeowners with no or negative equity. But some people still have plenty of equity: seniors.”

It is safe to assume, given the impact of the recent recession, more people fall into the credit-challenged category than ever before. Loss of jobs leads to late credit card payments, higher credit card balances, sometimes even bankruptcy, repossessions and foreclosures.

Put in a little time now helping these clients to get their credit back on track and you’re virtually guaranteed their business once they are ready to buy a home.

It is commonly stated that as many as eighty percent of credit reports contain some type of mistake. Assist your potential clients with understanding, identifying and addressing errors on their credit report.

You could also help them to create a plan to pay down debt, budget appropriately to eliminate late payments, control their spending to reduce or eliminate the use of credit cards. They will be rewarded with a higher credit score and better chances of loan approval (along with lower rates and fewer points when they do close), and you will be rewarded with a loyal client for life.

The current market has the potential to be a great one for any mortgage professional who puts in the effort to tap these hot markets. Your phone is not going to just ring on its own. But these people need your services, and if you market them effectively, you may just find you have more business than you can handle.

© 2009 by In Touch Today Corporation and its licensors. This article may be reproduced only in its entirety.

In Touch Today is a marketing company based in Denver, Colorado, that assists professionals in increasing their repeat and referral business as well as building professional referral sources and prospecting new clients. www.intouchtoday.com