Single-Family RentalNational Housing Market Outlook

The Boomerang Veers Off Course

March 4, 2014

Of the 5.3 million households who lost their home to a foreclosure or short sale from 2007 to 2013, we believe that:

  • 889,000 have already repurchased a home.
 
  • 1.6 million will be stuck renting for at least the next seven years.
 
  • 2.8 million will become homeowners again by 2021 (“boomerang” buyers).
 

Single-family rental landlords and homeowners will benefit from boomerang buyer demand. Riverside-San Bernardino will see the greatest activity, followed closely by Los Angeles and Phoenix.

Renters

The renter households created each year by foreclosures and short sales has declined over the past few years. Still, we expect a significant number of these households to rent for the foreseeable future. Single-family rentals should benefit the most from these renters. Note our estimate of the trend in renter households caused by the 2007–2013 distress:

Recent FHA Changes Will Hurt Homeownership

FHA loans are the most common loans for boomerang buyers, whose credit is not yet repaired. We expect the recently reduced FHA loan limits to impair the higher price points in a handful of markets. Those hoping to get a mortgage between the 2013 and new 2014 loan limits shown below will be disappointed.

The FHA loan limit changes will hurt the new home market more than the resale market because many new homes are priced right in the ranges eliminated by the new limits.

The Future

We have detailed metro data for boomerang buyers and other metrics relating to distress. These metrics, including shadow inventory and investor activity, significantly affect markets across the country. They will also impact home building and single-family rental businesses. For further information on boomerang buyers, rental households, and our metro-level analysis, please fill out this form. 

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