Boomerang buyers: A bright spot in the housing recovery?
I was reading an article recently from RealtyTrac that discussed the damage done to previous homeowners’ credit during the mortgage meltdown and a possible recovery in the making for affected.
As we all know, many people lost their homes to foreclosure, sold their homes through short sales, or gave up their homes through what is known as “deed in lieu of foreclosure.” In addition many people lost their jobs. The downturn affected millions of households, and it appeared at the time that it might have a permanent negative impact to credit.
Now, it seems a lot of these households have managed to improve their credit ratings, and enough time has passed that they can consider returning to the homeownership ranks. The first wave – more than 550,000 former homeowners, or “boomerang buyers” – may be able to return to the homebuying market in 2015, according to RealtyTrac’s analysis.
If you consider that a National Association of Realtors study shows just over 5 million existing homes sold in 2014, then a half-million more potentially eligible homebuyers is roughly a 10% increase in demand. And RealtyTrac projects the number of boomerang buyers to be over a million starting next year.
The bar graph below (used with permission from RealtyTrac) predicts the amount of households that may be able to return to the homebuying market in coming years. This is a bright spot on the horizon for the real estate market.