Who are “boomerang buyers”? If you remember in 2007 -2009, America suffered a housing crisis as millions of people lost their homes to foreclosures and short sales. In general, it takes seven years for a foreclosure to come off a credit history, and three to four years for a short sale to drop off. Those waiting periods have begun to expire, and these “boomerang buyers” are eager to get out of the rental market and back into home ownership. As of 2015, more than 7 million potential boomerang buyers who have been saving their money, improving their credit and re-establishing and/or improving their careers started becoming eligible for a mortgage again. According to RealtyTrac, the boomerang buyers began entering the market in 2015, and their numbers will explode over the next seven years. In 2016 alone, experts project more than 1.5 million of these buyers will start shopping for their new homes. They’re concentrated heavily in the South and East, although areas hit hard by the foreclosure crisis can be found all across America.
So what can these buyers face today that is different than in 2007? Credit score requirements are higher and many boomerang buyers will be surprised to learn that they’ll need a 20% down payment on a new home, although a few programs only require a 3.5% to 5% down payment. Also, a loan preapproval from a lender is a must now. That attitude among real estate agents and home sellers is typical, so buyers should expect to speak with a lender before they’re shown homes to buy.
Some boomerang buyers are ready to pay a monthly mortgage payment that will be considerably less than their current rent payment. Others may not be as quick to jump. Witness the huge growth in single family rental home demand. Investors who bought thousands of distressed properties during the housing crash are, for the most part, holding and renting them. They are commanding high rents and seeing very low vacancies. While some consumers may have repaired their credit, not all are ready to boomerang back to buying.