All Posts Tagged: boomerang buyers
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.The numbers: The homeownership rate nationally edged up in the third quarter — the first quarter-over-quarter increase since 2013, according to data in the US Census Bureau’s Housing Vacancy Survey released Oct. 27. Still, at 63.7% the homeownership rate was down 0.7 percentage points from a year ago, but 0.3 percentage points higher than in the second quarter. What counts: Homeownership has been trending lower in America for a decade, after peaking above 69%. The Great Recession took a toll, and the impact lingered since many homeowners who were foreclosed upon or had a short sale or mortgage modification were out of the market for several years while they repaired their finances and credit scores. Rapid price appreciation in recent years also kept potential buyers on the sidelines.
So what’s changed? You can’t call one quarter a pattern, but there are a number of positives today that may be helping lift the rate of homeownership:
1) Boomerang buyers: If you had a foreclosure, short-sale or other experience that may have hurt your credit profile during the Great Recession, remember time heals most wounds. An estimated 700,000 boomerang buyers may re-enter the mortgage market this year, according to a study this summer by TransUnion. The report estimates that 1.5 million homeowners hurt by the recession and housing crisis could re-enter the mortgage market in the next three years. If you feel you’ve been ineligible for a mortgage due to past credit issues, it may be time to talk to a lender to see where you stand at this point.
2) Credit scores. As I mentioned last week, credit scores on approved mortgages in September were at their lowest level in at least four years. Credit scores are not the only factor in a lending decision, but the overall lower scores is an indication mortgage lenders are easing up on credit. Don’t underestimate your chances for a mortgage. Each person’s situation is unique, but the first step is to talk to a lender to get a better idea of what may be possible.
3) Interest rates. Mortgage rates remain low by historical standards. The Federal Reserve’s Federal Open Market Committee (FOMC) once again in October opted not to raise interest rates, which is good news for borrowers. The outlook is for rates to rise in coming months, albeit very gradually. Low rates are an opportunity for first-time buyers to possibly get into the market and for move-up buyers to afford that next, possibly larger, house.
We’ll have to wait and see if homeownership rates continue to climb in the fourth quarter. But one thing seems clear: There are a lot of factors working in favor of homeownership right now.Read More ›
More than half a million “boomerang buyers” may return to the homebuying market in 2015.Read More ›