NatEquity’s initial target market is the retired workforce who purchased homes in what were new suburban areas in coastal California in the 1960’s and 1970’s, areas where homes have appreciated substantially over time. These seniors have aged in place largely because of favorable California property tax law – Proposition 13, passed in 1978 – that freezes property tax increases irrespective of increased home value, until a home is sold. These house-rich retirees live on fixed incomes that are not sufficient to qualify for traditional mortgage lending products, and are too house-rich for a HECM reverse mortgage. With a NatEquity Contract, a homeowner with a $1.25M FMV home can expect to receive $2,500 per month in tax-deferred income, which nearly triples the $1,300 average Social Security or defined benefit s/he receives today.
Coastal counties in California are the initial geographic market focus, for good reason. Of the 830 top-tier cities in America with average home values over $600,000, over one-third (i.e., 281 cities) are in coastal California. These markets have enjoyed almost 6% annual compounded home appreciation for more than 25 years. This target market now and in the next five years represents 1.8 million households, age 75 or older, with well over $1.3 trillion of home value, much of it debt free. Many of these senior homeowners are aging in place because of frozen property tax payments under California’s Proposition 13 dating back to 1978. Follow-on target states for other already designed products include FL, NY, NJ, IL, HI, MA, VA, MD, TX, with key cities and counties in these states.