“Boomerang Buyers,” or those buyers who have previously experienced a foreclosure or short sale, are expected to account for almost 1 in 5 sales in the Phoenix area this year. While it was once expected that this particular demographic would have to have wait 5-7 years before becoming eligible to purchase again, they’re back on the prowl as soon as two years following a short sale and three years after a foreclosure.
Areas that were more affected by the housing crisis in the first place are, of course, expected to have higher rates of boomerang buyers. Nationwide, these buyers are expected to account for almost 1 in 10 home sales.
There are a couple of reasons that boomerang buyers are expected to make up such a significant portion of purchases. Once a borrower has owned a property, it is often difficult to deal with the instability that is characteristic of renting; both in payments and location. And the prevalence of foreclosure means that refusing mortgages to these people wipes out a considerable percentage of potential buyers. Lenders, also looking to recover, are becoming less willing to alienate this portion of the population. After having the ability to rack up a decent down payment while living in a foreclosing property and a few years to nurse their credit back to health, boomerang buyers are actually pretty attractive buyers.
According to one recent report, California’s Riverside-San Bernardino and Los Angeles County metro areas are expected to experience the highest rate of boomerang buyers. The Phoenix metro area is third on the list. This could be attributed to California and Arizona’s high rates of foreclosure as well as the presence of anti-deficiency laws in both states. These laws protect most homeowners who experienced foreclosure from liability for any remaining debt. Often, this protection extends to both first and second mortgages. The lack of liability paves the way for future homeownership.
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