Report: Foreclosed-on homeowners may return to market

A Tuesday report from a national real estate research firm ranked Las Vegas No. 1 for its share of boomerang buyers — homebuyers who experienced foreclosure or short sale in the downturn but are set to purchase again.

It’s a segment that will make up more than a quarter of the city’s potential single-family homebuyers from 2015 through 2022, California-based RealtyTrac said. With such a large portion of the market, boomerang buyers could have a big effect on Southern Nevada’s real estate climate for much of the next decade, as long as lending and pricing factors cooperate.

“It’s similar to how a lot of people look at how millennials will really impact the future of the housing market,” RealtyTrac Vice President Daren Blomquist said. “It’s not going to make or break the market, but the market is better served if boomerang buyers do become homeowners again in larger numbers.”

That could especially be the case in Las Vegas, where developers are set to build several master plans in coming years. From Inspirada and Cadence in Henderson to Skye Canyon in the northwest, new-home communities are set to add thousands of units. Boomerang buyers could be a ready-made sales demographic, said Nat Hodgson, executive director of the Southern Nevada Home Builders Association.

“They already live here, so it’s not like we have to wait only on job growth or population growth. This is one segment of the buying market that almost says, ‘Here’s your growth right here,’ ” Hodgson said.

Plus, investors are listing more local homes and buying less often. Boomerang buyers could pick up the slack, said Joanne Stucky, a Realtor with Realty Executives of Nevada. Numbers from the Greater Las Vegas Association of Realtors show available listings without offers were up 18 percent year over year in December. The market’s inventory has doubled from two months to four months.

“Investors have stepped out of the marketplace, and we need Las Vegas to be a place where our residents can afford to buy a house,” Stucky said.

RealtyTrac’s statistics show just how many residents may soon be in the market for a home.

The company evaluated markets based on boomerang buyers as a percentage of total single-family housing units. Las Vegas topped the list, at 26.3 percent. That translates into 220,660 potential boomerang buyers from 2015, when the first wave reaches the seven-year window after which foreclosure weighs less on credit histories, through 2022, when the final group’s credit reports clear.

RealtyTrac’s analysis also considered demographics, giving extra weight to markets with high numbers of Generation X-ers and baby boomers. It also considered affordability. The typical local house payment is 24.5 percent of average income — below the 28 percent threshold traditionally considered affordable, Blomquist said.

Merced, Calif., ranked No. 2, with a 23 percent share of boomerang buyers, while Stockton, Calif., came in at No. 3, with 21.4 percent.

In sheer numbers as well, Las Vegas has an outsized cluster of boomerang buyers. Los Angeles has six times the population, at 12 million people, but had just 20 percent more boomerang buyers, at 264,562. Dallas-Fort Worth has three times the population, but about half the number of boomerang buyers, at 124,715.

Put another way, the Las Vegas Valley has 0.6 percent of the nation’s population, but 3 percent of its 7.3 million potential boomerang buyers.

Blomquist said Las Vegas has so many boomerang buyers because the city suffered a nation-leading foreclosure rate in the downturn.

Local real estate professionals say they’re already seeing once-distressed buyers filter into the market.

For some builders, boomerang buyers make up more than half of sales, Hodgson said.

And Stucky said she’s seen a “huge” increase in boomerang buyers since Jan. 1. She estimated queries from the group are up 10 times over what they were three months ago.

“It’s almost a rush. They’re absolutely a growing share,” she said. “Everyone who has done a short sale or foreclosure who is still here is counting the days until they can get a loan to come back into the marketplace.”

It’s not clear whether they’ll all make that comeback, though.

It’s still a challenge to get return buyers cleared for loans, Stucky said.

Blomquist agreed that lending standards are more difficult, but that’s mitigated by lower home prices, which make it easier to qualify, he said. The median single-family home price was $315,000 at the local market’s 2006 peak, according to the Realtors’ association. It was $204,000 in December.

Nor will all boomerang buyers want to purchase.

“Some of them may not want to deal with homeownership again because they got burned,” Blomquist said.

Price gains are a wild card as well. Increases have slowed from their 25 percent annual gains in 2012 and 2013, but at 10 percent in 2014, price jumps are still substantial. If they keep going, Las Vegas could lose the affordability that would help boomerang buyers back into the market, Blomquist said.

Finally, there are concerns about whether it’s a good idea for the housing market to rely on people with a history of foreclosure.

“Not all boomerang buyers should be homeowners, and we’ve certainly discovered that,” Blomquist said.

Contact Jennifer Robison at jrobison@reviewjournal.com. Find her on Twitter: @J_Robison1.