Are boomerang buyers returning to the market? This nickname has been given to people who lost a home to foreclosure, but are ready to buy again, now or in the near future.
We think it also applies to people who had a bankruptcy or damaged their credit during the recession. Many boomerang buyers belong to either the gen X or baby boomer generations. According to real estate tracking sites, almost a million buyers may be eligible for extended credit again next year, with estimates of a possible three to seven million more boomerang buyers returning to the housing market over the next seven years. Most of these buyers have been required to undergo seven years of credit repair after a foreclosure, or four years after a short sale, in order for a lender to consider a new mortgage loan. A strict definition of a “boomerang buyer” is someone that was 60+ days delinquent on a mortgage loan, someone who lost a mortgage through foreclosure, short sale or other closure, or someone who received a mortgage loan modification. To qualify for a home mortgage today, borrowers.
Real estate professionals believe these buyers may be a force to reckon with, based on their numbers. If half 1 million Boomerang buyers enter the market over the next five years they would represent 10 to 15% of all home sales.
Some families in this group are actively looking to purchase a home from an economic viewpoint. They point to high rental prices as an incentive to buy, because with an adequate down payment, a mortgage payment can be cheaper than renting. In addition, getting back into the real estate market may be a way to accrue equity and build financial assets.