From 2005 to 2008, folks in Phoenix were buying homes in mass. Home loans were easy. If you could fog a mirror or blink three times in a row you were in! What few people thought about back then was having to pay back the loan, because as you remember, home values were shooting through the roof! It was not in most anyone’s thought track until the band stopped playing and the market crashed.
As the market turned downward, many of these buyers realized that they could not afford their loan. To add to that burden, they learned that selling their home wouldn’t relieve them of the debt because they owed more than the home was now worth.
The downturn was sharp and prolonged. Within three years hundreds of thousands of homeowners were “upside down” in their mortgages. Many lost their home in foreclosure or sold at a “short sale.” Because of the rules imposed by Fannie Mae, Freddy Mac, FHA, etc., these homeowners would have to wait a set period of time, two to seven years, before they would again be allowed to obtain a new loan, and so of course they decided to rent.
As you know, property values began rising again in 2011, and these renters wanted to get back into homeownership. We call these folks “boomerang buyers.” Ironically enough, most of them are baby boomers and so I call them Boomerang Boomers, Boomer Boomerangs, or even Boomer squared. I digress. The point is, right now we are very much relying on them to float this current market since demand has dropped so low in general.
The hope is that in the next few years these boomerangers will be getting back into the market more and more. Heaven knows the millennials aren’t buying homes like we thought they would, so for now are hopes rest with boomer squared.