In 2013, singer-songwriter Lyfe Jennings introduced his hit
song “Boomerang” (just ask your kids if you haven’t heard it!). The lyrics
include the line “So throw me away, cause if I were a boomerang, I’d turn
around and come back to you.” Likewise,
in 2014 the housing industry will have a big hit from “Boomerang Buyers.” If you’re not familiar with this term, you’ll
soon understand the analogy. From 2008
through 2013 there were 269,049 properties in the Greater Phoenix area that
were either foreclosed or short sold. Those
former homeowners that experienced defaults have for the most part been thrown
out of the homebuyer market. But now in
most cases, those former homeowners are eligible to purchase homes again. They’re coming back. Ergo, they are dubbed “Boomerang Buyers.” In 2013 the top two markets for “Boomerang
Buyers” were Riverside-San Bernadino and Los Angeles.
The waiting period to qualify for a home loan after an event
like a foreclosure or short sale varies depending on the type of mortgage. Short sale waiting periods for conventional
loans range from 2 to 4 years, 3 years for an FHA loan. Foreclosure waiting periods range from 3 to 7
years.
Based on the number of short sales and foreclosures that
have already taken place, Fletcher Wilcox at Grand Canyon Title Agency
estimates that 42,444 previous homeowners that either short sold or were
foreclosed on will have completed the three year FHA waiting period and will be
eligible to purchase a home with an FHA insured loan in 2014. That’s a lot of boomerangs, and potentially a
lot of homebuyers coming into a market that has slowed down in recent
months. As the market shows slight signs
of softening, now is a great time for boomerang buyers to come back.