Millions of former homeowners who defaulted during the housing bust and lost their homes to foreclosures or short sales want try homeownership again. A survey of lenders by the National Association of Realtors found that half the lenders in the survey indicated an increase in potential return buyers seeking credit.
Over the 12-month period from July of 2013 to June of 2014, 8% of home buyers were previously distressed sellers, an increase from 6% over the previous 12 months, wrote NAR’s Ken Fears.
In 2015, the first wave of 7.3 million homeowners who lost their homes to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home. More waves of these potential boomerang buyers will be moving past that seven-year window over the next eight years corresponding to the eight years of above historically normal foreclosure activity from 2007 to 2014, according to a recent RealtyTrac report. Markets with the most potential boomerang buyers over the next eight years among metropolitan statistical areas with a population of at least 250,000 were not surprisingly in some of the nation’s largest markets that were also hardest hit by the housing crisis. These are primarily in the Sun Belt and Rust Belt.
“While millennials have gotten a lot of attention lately as the generation whose below-normal homeownership rates are changing the landscape of the U.S. real estate market, the boomerang buyers — who are primarily Generation Xers or Baby Boomers — represent a massive wave of potential pent-up demand that could shape the housing market in the short term even more dramatically,” said RealtyTrac.
Markets with the most potential boomerang buyers over the next eight years among metropolitan statistical areas with a population of at least 250,000 were not surprisingly in some of the nation’s largest markets that were also hardest hit by the housing crisis. These are primarily in the Sun Belt and Rust Belt.
Markets most likely to see the boomerang buyers materialize are those where there are a high percentage of housing units lost to foreclosure but where current home prices are still affordable for median income earners and where the population of Gen Xers and Baby Boomers — the two generations most likely to be boomerang buyers — have held steady or increased during the Great Recession.
There were 21 metros among those with at least 250,000 people where this trifecta of market conditions is in place, making these metros the most likely nationwide to see a large number of boomerang buyers materialize in 2015 and beyond. For all the markets on this list potential boomerang buyers represent at least 5 percent of all housing units, house payments on a median priced home require 28 percent or less of the median household income, and the population of Gen Xers and Baby Boomers combined has stayed steady or increased between 2007 and 2013.