Not much boom yet in ‘boomerang’ buyers

10/29/2014

Not much boom yet in ‘boomerang’ buyers

NEW YORK – Oct. 27, 2014 – 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 weren't able 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 foreclosed on or after 2007, only 2.1 percent of the borrowers 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 repurchased another home by the end of 2013.

The numbers are still low, but some mortgage lenders report 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.

"I see a lot of people coming back into it with eyes wide open," says Angel Johnson, a real estate professional with Redfin in Phoenix. "They can get a loan, but they're 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 homeownership again, and how many will stay as long-term renters."

Source: "Years After Market Collapse, Sidelined Borrowers Return," The New York Times (Oct. 22, 2014)

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