REAL ESTATE: Where are the boomerang buyers?
EBRA GRUSZECKI | The Press-Enterprise | March 5, 2014 | link
This headline definitely caught my eye: “The Boomerang Veers Off Course.”
It appeared in a March 4 newsletter by Irvine-based John Burns Real Estate Consulting, as Sean Fergus makes the point that of the 5.3 million households that lost a home to a foreclosure or short sale from 2007 to 2013, many are regrouping to become homeowners again.
Fergus wrote that 889,000 people once in a state of mortgage distress have already repurchased a home.
Some 1.6 million households will be stuck renting homes for “at least” seven years. Another 2.8 million households from that group will become homeowners again — making it into the boomerang classification — by 2021.
The Inland region of Riverside and San Bernardino counties is predicted to see the greatest activity, followed by Los Angeles and Phoenix.
Now, for the boomerang part: Renter households created by foreclosure and short sale activity declined annually over the past few years — falling from 5.3 million in 2009 to 4.4 million in 2014, Fergus said.
But with FHA loan limits falling $144,650 in the Inland region to $355,350 this year, he predicted that renters hoping to become a boomerang buyer in 2014 and beyond could be disappointed. FHA-backed loans are common in the boomerang buy-pool, he says.
Many in the industry agree the limit that was lowered from $500,000 could keep that boomerang moving in a straight line across Inland Southern California for some time: Houses that are likely to be affected the most are just rolling off the production line.