The 2008 recession also included a massive housing market crash in the U.S. that resulted in millions of homeowners losing their homes to foreclosures or short sales. For the seven years that such an event had remained on their credit reports, that had shut these former homeowners out of the market as they sat the proverbial fence to repair their credit and hope against hope that the market would be more favorable after those seven years.
In 2015, the market is indeed much more favorable, and that brings to fore the phenomenon of the “boomerang buyer,” or an individual who lost their home, only to become a homeowner again. Data from RealtyTrac shows that there may be some 7.3 million such buyers in the next eight years, with most of these consumers being from the “Generation X” or Baby Boom demographics.
In the seven years that these boomerang buyers were not able to buy a new home or qualify for a mortgage, froth had built up in the interim, making this one of the many reasons why the housing market could make a stronger recovery going forward. Boomerang buyers have typically been overlooked due to the heavy focus on changes to mortgage guidelines that generally benefit the millennial demographic, many of whom are potential first-time homeowners. But with these new analytics, it looks like the boomerang buyer crowd is getting the recognition it deserves.
“The housing crisis certainly hit home the fact that homeownership is not for everyone, but those burned by the housing crisis should not immediately throw the baby out with the bathwater when it comes to their second chance at homeownership,” articulated First Team Real Estate senior vice president of sales Christopher Pollinger.
“Homeownership done responsibly is still one of the best disciplined wealth-building strategies, and there is much more data available for homebuyers than there was five years ago to help them make an informed decision about a home purchase.”
RealtyTrac culled its data from foreclosure, affordability, and demographic-related stats to come up with its forecast of 7.3 million boomerang buyers expected in the coming eight years. In terms of markets with the most buyers of this kind, the Phoenix-Mesa-Scottsdale metro in Arizona led the way with 348,329, followed by the Miami-Fort Lauderdale-Pompano Beach metro with 322,141. The Detroit, Chicago, and Atlanta metros came in at third, fourth, and fifth, while the rest of the top ten included, in order from sixth to tenth, Riverside, Los Angeles, Las Vegas, Tampa, and Dalllas.
As far as markets with the highest share, or percentage of boomerang buyers, the Las Vegas metro in Nevada was again prominent, with 26.3 percent expected to return to homeownership between now and 2023. Merced and Stockton were second and third, with the two California metros expected to have a share of 23.03 percent and 21.41 percent respectively. Cape Coral, Fla., Modesto, Phoenix, Riverside, Vallejo, Detroit, and Bakersfield rounded out what appears to be a California-centric top ten, with Modesto, Riverside, Vallejo, and Bakersfield making it six out of ten metros located in the so-called “Golden State.”
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