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A Wave Of Boomerang Buyers Could Be Headed Our Way
Do you remember the thousands of people who defaulted on their homes during the last housing crisis? Those homeowners with short sales and foreclosures are coming back into the home buying game. And, those former homeowners that had bankruptcies are about to or already have had their BKs discharged. What this means is we are starting to see a tidal wave of homebuyers hitting the market.
What is creating the boomerang tidal wave? Almost 13 million homes entered the foreclosure process between 2007 and 2014. That’s approximately 29% of all homes with a mortgage. At the peak of the foreclosure crisis in 2009, more than 650,000 homes, 1.5% of those with a mortgage, entered foreclosure in a single quarter. According to CoreLogic, this is a key year for boomerang home buyers because seven years have passed since the peak of foreclosures in 2010. We are calling this the Seven Year Switch because almost 2 million homeowners who faced foreclosure between the start of the housing crisis in 2007 through 2010 will have met the seven-year period after which the Fair Credit Reporting Act requires derogatory information to be removed. By the end of 2020, another 1.2 million homeowners who lost their homes to foreclosure between 2011 and 2013 will become eligible to buy again. This means that more than 3 million homeowners negatively affected by the mortgage crisis could re-enter the housing market in the next three years.
But the question on everyone's chapped lips is do they want back in? The answer appears to be yes! Most boomerang home buyers understand the housing market and realize that in the long term, the benefits of owning a home outweigh the benefits of renting. Most boomerang buyers have seen increases in monthly rent for housing, whereas home buying provides an opportunity for stable payments for the life of the loan. Boomerang home buyers also understand the many tax benefits of owning versus renting. The housing market has stabilized, and many areas have had a major rebound. Plus, the main ingredient that fueled the last housing crisis, sub prime lending, is not a part of the equation in this market.
Time heals many things, including credit scores. Many people who saw their credit scores drop severely after suffering a foreclosure or short sale during the Great Recession are recovering or have recovered. Credit agencies are reporting that credit scores for large numbers of previous short sale victims are rising rapidly. In fact, nearly 70% of people in this class have higher average credit scores than all others combined. And given the importance of a good credit score to home loan qualification, this is probably the major reason for a buying wave from boomerang buyers in late 2017 and into 2018. Given the large numbers of short sales and foreclosures in 2010 through 2012, millions of those who lost their homes and have been renting, are strong qualifiers for a new loan. In addition to boomerang homebuyers understanding the benefits of homeownership and having improved credit scores, they also are enjoying an extended period of low interest rates. Mortgage interest rates are still at historical lows.
So, if you've discovered that you are a boomerang homebuyer from reading this blog, and would like to ride the wave back into homeownership what should you do? The answer is contact us right away and we will help you with our VIP Home Buyer Program. Literally, within 21 days you could be in a home. We will help you get a loan preapproval from a lender that can close escrow fast. That lender will help you sift through loan options like Down Payment Assistance Programs, Federal Housing Administration (FHA) loans and other loan types. If you’re a veteran you will want to check with the Veterans Benefits Administration or VA loans and we will guide you through that process. We want to help you find the home of your dreams! Call us today at 916-838-8745. Online at RobertLewisGroup.com. Find us on Facebook at The Real Estate Report with Brent Gove & Robert Lewis.