When the housing market crashed just a few years ago, San Diego home owners were among the hardest hit. As home values plummeted below what their owners actually owed on them many people had no choice but to resort to short sales and foreclosures in order to get their heads above water. According to real estate data company CoreLogic, the number of San Diego County residents who underwent either a short sale or foreclosure between 2006 and 2014 tipped the scales at 116,000.
Now that the nation has weathered the storm and recovery is well in progress, many of those home owners who lost their homes are now looking at the prospect of owning once again. Following a short sale or foreclosure, home owners have to complete a waiting period before they are eligible to apply for a loan again. In recent months many San Diego residents have seen this waiting period run out, meaning that there is a whole new crop of buyers that are ready to brave the housing market again.
While the prospect of owning a home might seem wary after having gone through such an ordeal previously, many of these home buyers are bolstered by a much stronger economy and the lenders that are capable of making their dreams come true are, in fact, very forgiving.
“The scales have tipped,” said Mark Goldman, a loan officer at C-2 Financial and real-estate lecturer at San Diego State University, to The Union Tribune. “Instead of having the majority of properties be distressed sales, the formerly distressed sellers are coming in as buyers who are recovering, so not only is the market recovering, the buyers are recovering.”
Boomerang Home Buyers Boost Market
The term coined to refer to home buyers that lost a home to short sale or foreclosure and are now financially stable enough to buy again is boomerang buyer. This group has become something of a national phenomenon, although California has seen the lion’s share.
According to the National Association of REALTORS®, as many as 9.3 million home owners lost their homes between 2006 and 2014. Since then, 1 million boomerang buyers have already purchased homes and over the next five years an estimated 1.5 million people will become eligible once again.
In California there were 1.68 million foreclosures and short sales with 250,000 of those home owners having already purchased a home again. Over the next eight years, experts predict approximately 308,000 will have become property owners again.
While many lenders like Fannie Mae and Freddie Mac won’t approve a loan for a buyer that had a foreclosure within seven years or a short sale within four years, the strengthening economy is giving buyers much more clout in these situations. If a borrower can show that they can pay, lenders might be a little more lenient in lending standards.
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