As the senior demographic continues to grow and evolve, reverse mortgage professionals may be getting more questions about home renovation projects and how to fund them.
Tapping into home equity through a traditional reverse mortgage, a proprietary product or even the vastly underutilized HECM for Purchase program can be a path for seniors to repair their homes or make them better equipped to handle aging in place. But financing is just one piece of the puzzle as renovation projects can be time-consuming and emotionally overwhelming.
Julie Kheyfets and her company, Block Renovation, are looking to simplify the process and bill themselves as the “Airbnb for home renovations.” The CEO recently sat down with HousingWire’s Reverse Mortgage Daily to discuss renovation trends and the burgeoning market for accessory dwelling units (ADUs) — another option for seniors who aren’t getting the most out of their living space.
This interview has been edited for length and clarity.
Neil Pierson: For people who aren’t familiar with your company, can you outline what you do and what you’re trying to solve for homeowners?
Julie Kheyfets: Block Renovation is building the most trusted place to plan and hire for major renovation projects. These are projects anywhere from $10,000 to millions of dollars for people who are really making big changes to their space. We started in New York in 2017, expanded over the years and last year went live in all 50 states.
Renovation is a massive market. Americans spend over $500 billion every year renovating their homes. Sometimes these are cosmetic choices, but often it’s a necessity. People’s families are changing. They have kids, their parents move in as they age, and they need to reconfigure and adapt their space.
Renovating is usually the most expensive purchase you make, other than buying the home itself, and you may need to make hundreds of decisions, often without deeply understanding the space. Homeowners are not construction experts. They have no idea about the actual work that needs to be done — plumbing, electrical, etc. They have no idea how much things should cost.
We first help homeowners figure out what to do with their space — things like design and budgeting. We do that through a combination of AI tools on our platform and our team. And when homeowners are ready to actually meet contractors, host site visits, get bids and potentially go renovate, we match them with a curated selection of contractors from our vetted network. And homeowners hire them through the platform, communicate with them there, so they always have a safety net.
NP: Our audience focuses on the senior demographic, so what are the trends you’re seeing among people who want to age in place? What if they need help from family and have a multigenerational living situation?
JK: First off, folks who own their homes prefer to age in place. Most do not want to move into a nursing home and live their last days there. Many people can’t afford to. It’s really expensive.
But their homes might not be great for the older years of life. They might have a lot of stairs. They might have a bathtub that’s hard to climb into. A part of renovating as you age in place is creating accessibility and mobility adjustments.
In the bathroom, for example, changing a tub to a shower and making sure the shower is curbless so it’s very easy to step or roll into. Things like grab bars, so in case you’re falling, you have something to catch you. Things like widening doorways and hallways so you can fit wheelchairs and walkers. Those are the kind of adjustments we see baby boomers making as they age in place.
You also mentioned multigenerational living. Today, almost 20% of Americans live in multigenerational households. This means they have multiple generations of adults living in the home, so not just you and your kids, but either older parents or children who are already adults.
Fundamentally, there’s a shortage of housing in the United States. It is very hard to build new housing. That’s largely because regulation has expanded. And NIMBYism is very real. People don’t want more supply in their locale because they’re afraid their own home price is going to come down.
A lot of folks can’t afford to continue living in separate homes, so they move in with their kids. And as I mentioned, caregiving is also very expensive. The No. 1 reason we see multigenerational households form is the cost of caregiving.
NP: ADUs could help address the supply shortage, and they may be of interest to senior homeowners who want to downsize or have family live with them. But what are the regulatory hurdles for these projects? It seems that many jurisdictions are very specific on what can and can’t be allowed.
JK: Historically, ADUs were very challenging because of local jurisdictions. A lot of them have municipal code requirements that say something like, if you create a separate structure on your land, it has to be owner occupied. OK, but what do you do with your other, bigger home? Or you might need to have two parking spaces. Well, you might not have space for that.
There continues to be a litany of regulations that make building an ADU really challenging. What we’ve seen in the last decade or so is that states have actually realized that in the midst of a historic housing shortage, ADUs can be an amazing solution. Instead of having to get a whole block or HOA aligned on building whole new homes, it’s private homeowners who own land who are willing to create more supply. And what’s been happening is states are actually passing laws to override local restrictions.
States are saying, actually, if it’s under 800 square feet, it doesn’t have to be owner occupied, or you don’t need two parking spaces. This started largely in California. In the early days, California had about 30% of all ADUs in the country. Then Oregon and Washington came on board. And now almost 20 states have passed laws to make ADUs more compliant and essentially legalize them.
States are also now putting incentives in place. New York state set aside $85 million in grant money — up to $125,000 outside of New York City, $175,000 in New York City — for anybody who builds ADUs within a certain set of regulations on their property. And it’s been really great for homeowners who need the space.
NP: What are you doing to partner with mortgage originators and real estate agents who want to know about these trends to help their clients?
JK: We have partnerships with all kinds of players in this space, including financing providers. And often these folks say, “I have a customer who came to us for liquidity, but they also need help figuring out what to do with their space and who to hire. They’re borrowing $300,000 from us, but they want to know they can trust their contractor.” We partner with them to make sure the homeowner has liquidity, a good plan and budget and a contractor in place.
We partner with real estate brokers as well. For example, in places like New York, you have a lot of old inventory sitting on the market. A client might say, “I really want to buy, but renovating is really scary. It’s invasive and very expensive. What if it goes wrong?” We can surround them with the right support from their broker and the right renovation support from us.
English (US) · 