Boomerang Buyers Are Looking To Become Homeowners Again
Boomerang buyer is another new term that has recently become part of real estate terminology. A “boomerang buyer” describes people who have lost their home to a foreclosure or short sale during the housing bust of the last several years, and are seeking to become home owners once again. Since 2007 an estimated 4.7 home owners are estimated to have lost homes through foreclosure, and this group could be an import future pool of buyers
Foreclosure does have a big impact on a person’s credit score, but if consumers are diligent about repairing their credit, they can look at becoming buyers after waiting two to seven years, depending on their financial standing. The FHA wait is three years for either one.
Boomerang buyers are most prevalent in areas such as California and Arizona that were hardest hit by foreclosures, and their return is contributing to rebounds in those markets. Going forward, growing numbers of boomerang buyers could help offset the expected slackening in demand from investors as home prices rise.
With the start of the housing bust now six years past, this will be the first big year for this buyers returning to the market, accounting for 10% of home sales, up from 4% last year. Boomerang buyers are expected to stay at that level until starting to subside in 2016, about eight years after the height of the foreclosure crisis.
Taking a look at Southern California and across the Southwest, almost 14% of new home sales in the last half of 2012 were to boomerang buyers. That compares with less than 5% of new home buyers in the Northeast, Southeast and Northwest.
Most of these reentrant buyers are expected to get loans from the Federal Housing Administration, which requires just 3.5% down payments vs. 20% for many conventional loans, and borrowers can also have less than stellar credit.
Even after the financial wreckage and emotional strain of a short sale or foreclosure, boomerang buyers say they’re driven to own for the same reasons they bought before. They want their own place. They see it as a good investment as prices have dropped since their last foray into home ownership.
The rent versus own equation is also driving home ownership. Nationwide, buying a home is now 44% cheaper than renting in 100 leading metros, as data from Trulia indicates. Trulia also estimates that rents have increased 8.3% in the past two and a half years.
The desire for home ownership remains strong and boomerang buyers are evidence of that.
Wallingford PA Real Estate – Wallingford, PA 19086
