Over 7 Million People Who Suffered Foreclosures Could Return to Housing Market
About 7.3 million people who owned a home that went through foreclosure in the housing market collapses could potentially be back in the real estate market within eight years. (These people are known as “boomerang buyers.”) The emphasis should be on “potential,” because there is no guarantee they will return at all.
According to real estate research firm RealtyTrac:
The first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis in 2015 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.
While it is hard to imagine any lending institution will give them loans again, some have been forgiven, at least financially. This group is relatively old by home ownership standards:
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. U.S. Census data shows home ownership rates for those ages 35 to 44 — roughly Generation X — were 11 percent below historical averages going back to 1994 in the third quarter of 2013, while home ownership rates for the below age 35 cohort were 10 percent below historical averages.
The markets most likely to see a large share of boomerang buyers between 2015 and 2022 are among those that collapsed most badly when the rug was pulled out from under the real estate market. In rank order, these are Las Vegas (26%); Port Saint Lucie, Fla. (21%); Orlando, Fla. (13%); Greeley, Colo. (13%); Sarasota, Fla. (11%); Daytona, Fla. (11%); Palm Bay, Fla. (10%); Lakeland, Fla. (10%); Ocala, Fla. (10%); and Tampa, Fla. (9%). Florida is generally regarded at the state most devastated by the damage done by the real estate bubble.
The markets with the largest number of expected boomerang buyers from 2015 to 2022 in raw numbers are Phoenix (348,000), Miami (322,000) and Detroit (304,000).
Again, the fact that someone may be a buyer does not mean much. Many of these people might rather rent.
Methodology: RealtyTrac analyzed foreclosure, affordability and demographic data to provide predictions of when and where these boomerang buyers are most likely to materialize.