Dive Brief:
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A decade after the start of what the National Association of Realtors called “the foreclosure crisis,” nearly a million owners who lost their homes to their banks have bought replacement homes.
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An additional 1.5 million are likely to have restored their credit and will become eligible to buy homes over the next five years. That influx could boost housing demand, according to an NAR analysis of the nearly 9.3 million homeowners whose homes were foreclosed or short-sold between 2006 and 2014.
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The association did the research to estimate how many return buyers have become creditworthy enough to re-enter the housing market over the next few years. California, Arizona and Florida will see the most return buyers.
Dive Insight:
The NAR found, however, that “millions more” still have bad credit that will prevent them from becoming homeowners again, at least for the next decade.
A distressed sale has a “considerable impact” on a homeowner’s credit score, NAR’s Chief Economist Lawrence Yun noted, and it can take years to repair that damage.
"The extended time needed to repair credit scores or save for a downpayment, combined with other overlapping post-distress factors on credit quality such as missed auto loan or credit card payments, will limit the ability for many to buy in the current credit environment," he said in a press release.