Only a small number of Americans who went through a foreclosure or short sale during the economic downturn have bought homes again, according to a study by Experian.
Many of these sidelined buyers were unable to buy two to seven years after. Now, four years following the Great Recession – which sparked the largest wave of foreclosures and short sales – millions of former borrowers are now eligible to buy again, but only a trickle are returning.
Of about 5.43 million owner-occupied homes that were foreclosed on after 2007, only 2.1 percent of the borrowers – or 114,100 – had purchased a primary home by the end of 2013, according to Experian’s research, which reflects findings from 10 percent of its 220 million credit files. Of nearly 809,000 short sales on owner-occupied homes after 2007, about 44,300 – or nearly 5.5 percent – of owners have repurchased another home by the end of 2013.
The numbers are still low, but some mortgage lenders are reporting a gradual increase. For example, senior mortgage loan officer Deb Klein with Cobalt Mortgage in Chandler, Ariz., told The New York Times that 10 to 15 percent of the loans she closes are for borrowers who’ve had a distressed home sale. In Orlando, Fla., Rick Cason with Integrity Mortgage says two to three loans out of every 10 are for borrowers with a foreclosure or short sale in their past.
Indeed, some of these former home owners are re-emerging. "I see a lot of people coming back into it with eyes wide open," Angel Johnson, a real estate professional with Redfin in Phoenix, told The New York Times. "They can get a loan, but they are still spooked."
The pool of potential “boomerang buyers” is big. About 3.5 million borrowers lost their homes to foreclosure between 2006 and 2010, while 757,500 more went through short sales, according to RealtyTrac data.
"The behavior of these potential boomerang buyers will be a big part of shaping the U.S. housing market going forward," says Daren Blomquist, vice president at RealtyTrac. "The bigger question now becomes how many have the stomach for home ownership again and how many will stay as long-term renters."
photo credit: Dea Bee via photopin cc
Quick question--isn't it true that after a foreclosure you need to wait 7 years to get traditional loan terms with the GSEs?
If that's the case, wouldn't you expect there to be very few "boomerangs" to date anyway? Simple math...2007+7=2014. Foreclosures didn't start in earnest until the latter half of 2007. We are only in the latter half of 2014--if there is going to be a boomerang trend, it should start about now.
If it hasn't started with more significance by the end of 2015, then I think the concept of boomerang buyers should be in question.
I believe its just four years in some cases, and there are certain programs in some states to get people back on the housing ladder. Whether or not people actually qualify is another matter!
The Majority of Families who have had a Foreclosure or Short Sale end up having a history of Mortgage Late payments. and It can be confusing and deflating to consumers who have to wait 4-7 years after the unfortunate incident of a Foreclosure or Short sale or Deed in Lieu. Most of these consumers are now renting from a landlord or are living with family or friends to have a roof over their head.
However in approved states there is a solution to help these consumers get back the Pride of Homeownership and Not have to wait years to buy their home again. Feel free to contact me so I can share the right path with a solid solution to your new home goals.