Will Boomerang Buyers Provide a Boost to Housing Market?
An influx of new buyers might be entering the housing market, in Chicago and across the country. Where are these new buyers coming from? According to a recent feature story by RealtyTimes, they’re boomerang buyers, buyers who previously owned homes and lost them to foreclosure.
You might not think that these buyers would eager to return to the housing market. After all, they’ve already been burned. But housing experts expect many of these former owners to seek out new homes as they put their past foreclosures behind them.
Here’s the reason: Many of the people who lost homes to foreclosure during the housing boom in 2008 and 2009 no longer have those foreclosures on their credit reports. Foreclosures only remain on your reports for seven years. Those people who also had bankruptcies on their credit reports? Chapter 13 bankruptcy filings stay on reports for seven years, while Chapter 7 filings remain for 10. Many former homeowners have seen those negative markets drop off their reports, too.
And once foreclosures and bankruptcies disappear from boomerang buyers’ credit reports? What’s to stop them from investing in a home again?
According to the RealtyTimes story, more than 12.8 million homes entered the foreclosure process from 2007 through 2014. RealtyTimes quoted research from CoreLogic saying that 1.9 million homeowners who faced owner-occupied foreclosures from 2007 through 2010 have now seen their foreclosures fall off their credit reports.
If these boomerang buyers do return to the housing market, it could provide a nice boost. The more buyers in a market, the better it is for sellers. The more likely, too, that sellers will receive offers closer to their asking prices or that they might enjoy a bidding war on their properties.
And for the boomerang buyers themselves? Yes, losing a home to foreclosure is stressful. But that doesn’t mean that homeownership should never be a goal for them again.