It’s been nearly seven years since the foreclosure crisis peaked in 2010, and that means many former homeowners who lost their homes could be re-entering the housing market.
That’s because it takes seven years to erase the black mark of a foreclosure on a consumer’s credit report and related credit score needed to re-qualify for a mortgage.
In a Insights Blog post, CoreLogic looks at the trend of these so-called “boomerang buyers” and their traditional impact on the housing marke. t
About 1.9 million homeowners who faced owner-occupied foreclosures between the start of the housing crisis in 2007 through 2010 will meet the seven-year period next year. Seven years is what the Fair Credit Reporting Act requires for derogatory information on a credit report to be removed.
CoreLogic says that by the end of 2020, another 1.2 million homeowners who lost their homes to foreclosure between 2011 and 2013 will become eligible.
The impact, however, on the housing market will be gradual, not sudden, based on historical data, writes Kristine Yao.
“While millions of former homeowners reentering the buying market would have a significant impact on home sales, historical data shows a more gradual return rate for these so-called boomerang buyers, with less than half returning to homeownership even 16 years after the foreclosures were completed,” writes Yao.
Recent historical patterns show that about 150,000 boomerang buyers return per year, or 12,500 per month.
Of the 4.4 million owner-occupied foreclosures completed since 2000, 1 million foreclosed homeowners have returned.