Seven years after the housing crash, Orlando has been dubbed a “#boomerang market” as former homeowners begin to restore their credit enough to purchase another house. Check out this Video on the #housing Market now.’Boomerang’ buyers poised for homeownership in Orlando. https://www.youtube.com/watch?v=D1azdK3G4_k
More than almost anywhere in the country, Metro Orlando has the makings of a housing market poised to benefit from foreclosed homeowners ready to buy again, according to a report released Tuesday by RealtyTrac.
The first wave of more than 100,000 foreclosures and short sales engulfed the Orlando market seven years ago, and some of those former homeowners have cleaned up their credit in that time. Whether they re-enter the market depends largely on wage increases and home-price appreciation.
“We are now paying in rent what we couldn’t afford in mortgage back then,” said Orlando resident Hilary Liermann. Following a short sale of her Gotha home in 2010, her family of four now lives in the Dr. Phillips area. She said they could consider buying a home again, depending on her family’s income and on home prices in their school district.
In the four-county Metro Orlando region, more than 123,000 “boomerang” buyers who lost their #homes in foreclosure and short sales since the market crashed in 2007 could regain the ability to purchase houses through 2022, according to RealtyTrac.
Typically, it takes seven years for homeowners to repair their credit score after a foreclosure, or as little as four years for homeowners who went through a short sale. Andy Insua, Florida director of mortgage for Fifth Third Bank, said new types of mortgage loans are even more forgiving of distress-home sales.
But potential boomerang buyers might still face problems.
“There’s going to be some head winds for people coming back into the market: One is that wages haven’t grown significantly, and prices have gone up, so affordability has come down,” Insua said. “And, also, the inventory in that space is thinner, so it can be tougher to find what you’re looking for.”
And then there is a “kind of emotional scar tissue” and also a lack of understanding that prospective buyers may, in fact, qualify for a mortgage, Insua added.
In Dr. Phillips, Liermann said it’s been nice to see her children settle into high-performing schools and to call the landlord last summer when the air conditioning needed to be replaced. Financially, though, it’s not easy to write a mortgage-sized check for the monthly rent. And while renters risk being forced to relocate if their landlord decides to sell, the pain of a short sale isn’t easily forgotten, she added.
“We’re real nervous, and we’re kind of putting it off and putting it off … maybe in the next few years,” she said Tuesday.
During the last 10 years, Orlando’s homeownership rate has dropped from 77 percent to 66 percent, property records show. About a third of Orange County’s new residential construction last year was apartments — more than double the rate from the housing-boom years of 2003 through 2006, property records show.
A shift of former Orlando-area homeowners from their rentals back into homeownership could strengthen the housing market, but it could also signal weakening demand for new apartments and the region’s expanding pool of rental houses.
“It’s not a slam-dunk they’re going to become buyers. At this point, it’s still a wild card,” said RealtyTrac Vice President Daren Blomquist. “But how they behave moving forward will affect a lot of people in the industry.
“If they do move forward, that could be a problem for some of these developers who are counting on them to remain renters for some time.”
RealtyTrac outlined three factors driving the boomerang market for Metro Orlando:
•The area has enough former homeowners to purchase 13 percent of the housing stock in the four-county area during the next seven years.
•Orlando-area buyers pay a median of just 23 percent of their income for a median-priced home — far below the 28 percent point at which a market is no longer considered affordable.
•The two Orlando groups most likely to have lost their homes — Generation X and baby boomers — have grown larger from 2007 to 2013, the real-estate-research company found.