The first wave of homeowners who lost their homes due to foreclosure or short sale during the Great Recession are eligible to re-enter the housing market this year.
7.3 million former homeowners have the potential to become homeowners again over the next eight years, according to real estate research firm RealtyTrac. This group of possible homebuyers – mostly Generation Xers or Baby Boomers, age 35-70 – have been dubbed “boomerang buyers”.
Who Is Eligible to Buy in 2015?
While homeowners can recover from foreclosure in as little as three years, and possibly even 1 year after a foreclosure if it can be proven that the foreclosure was due to a job loss or 20 reduction in a borrower’s total income with FHA’s Back to Work Program, RealtyTrac uses a seven year period for recovery for their research model – which they consider a “conservative” amount of time to rebuild credit score.
Using that model, more than 550,000 people have fulfilled their seven year waiting period and are poised to buy in 2015, according to RealtyTrac. The number of boomerang buyers eligible to buy again is predicted to peak at 1.3 million people in 2018 and tapering off by 2022.
Where Will They Buy?
The firm’s study also identified the markets in which boomerang buyers are likely to buy again, including cities that were hit hardest by the foreclosure crisis, such as Las Vegas, Fort Myers, Modesto, and Phoenix.
Boomerang buyers are most likely to flock to metros with:
- A high percentage of housing units that were lost to foreclosure
- Affordable home prices for median income borrowers
- Populations of Generation X and Baby Boomers that have increased or remained steady since the Great Recession
What Does It Mean for the Housing Market?
RealtyTrac says the 7.3 million potential boomerang buyers “represent a massive wave of potential pent-up demand” – but for now, there’s only potential for a boomerang buyer boom.
If you have experienced a foreclosure or short-sale and are interested in exploring your options for home financing, contact one of our mortgage bankers for more information.
For more information general information on the home buying and financing process, download our Mortgage 101 Handbook.