Everybody Back in the Pool!
Former homeowners who lost their homes to foreclosure are beginning to re-enter the housing market, according to recent research from the National Association of REALTORS® (NAR). But they face challenges to overcome their damaged credit, which will affect their ability to qualify for a mortgage.
The study finds that of the 9.3 million homeowners who underwent a foreclosure or short sale between 2006 and 2014, nearly 1 million have likely already purchased a home again, while 1.5 million more are likely to do so within the next five years. California, Florida and Arizona states that were all hit hard by the foreclosure crisis are expected to see the largest share of return buyers within the next decade. But because of their compromised credit, millions more potential buyers will be left out.
Of the 9.3 million homeowners who underwent a foreclosure or short sale between 2006 and 2014, nearly 1 million have likely already purchased a home again.
NAR Chief Economist Lawrence Yun attributes the wave of foreclosures during the housing crash to loose lending standards, falling home prices and rising unemployment. Now fueled by a gradually improving economy and the strong rebound in home prices, some of these former distressed owners have returned to the market, and more will likely become eligible in coming years, he says.
The deep wounds inflicted on the housing market during the downturn are finally beginning to heal as distressed sales continue to decline and home prices in some parts of the country have bounced back to their near-peak levels, adds Yun. Borrowers with restored credit will likely have the ability and desire to own again, encouraged by the long-term benefits homeownership provides in a stronger economy and more stable job market.
