Many former homeowners could start buying again this year and give metro Phoenix’s housing market a much-needed boost.
They are called boomerang buyers because they were thrown out of the mortgage market after foreclosures or short sales during the crash but now can qualify for a home loan again.
Most lenders require a seven-year sitting out period for borrowers who default on home loans. That waiting period is over this year for the first wave of people to lose houses during the crash.
A new report from national real estate research firm RealtyTrac says as many as 350,000 boomerang buyers could purchase metro Phoenix houses between now and 2022. That’s about how many Valley houses were foreclosed on or sold through short sales during the crash.
National housing analyst John Burns calls Phoenix the third-biggest U.S. market for boomerang buyers. Riverside-San Bernardino, Calif. is ranked No. 1 and Los Angeles is No. 2.
The boomerang home-buying trend actually started a few years ago in the Valley, but then stalled in 2014 with the rest of the housing market.
Some boomerangers, who went through short sales or handed their house keys over to the federal government’s mortgage giants Fannie Mae and Freddie Mac, didn’t have to wait seven years. The first wave of these buyers really started in late 2012, as little as three years after a foreclosure for some of them.
Real estate agent Phyllis Borchardt was was one of the Valley’s first boomerang buyers. She and her husband, Larry, were able to qualify for a VA loan in mid-2012, after being forced to sell their Buckeye home through a short sale in 2010. The couple lost jobs and income due to the recession. They applied for a federally-backed home loan modification but weren’t approved in time to save their house.
The couple was able to buy again three years later, but Phyllis Borchardt said getting another “mortgage wasn’t easy.”
Real agent Matthew Coates of Chandler-based West USA Realty Revelation said there were more rebound buyers in metro Phoenix during 2012-13 than he is seeing now.
“There’s a lot of talk, but minimal activity from boomerang buyers at this time,” he said. “Perhaps they are unaware they can buy a home again or they have made a conscious decision to be renters for the time being.”
Lending guidelines are tougher now than a few years ago due to new federal guidelines. Some potential boomerang buyers may have built their credit scores back up to the 700 or higher needed now to qualify for the typical mortgage, but they don’t not have 10 to 20 percent of a house’s cost for a mortgage down payment.
Could it be that many potential boomerang buyers are still waiting for their savings accounts to come back, too?
Source: Azcentral
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