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Wednesday, Feb 1, 2023
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The Number

Blame underemployed, drowning-in-student-debt millennials. That’s what most experts do to explain the continued sluggishness in the housing market: Sales were down 11.2 percent in the Valley last year, according to the San Fernando Valley Economic Research Center at Cal State Northridge. Potential “boomerang” buyers poised to re-enter Southern California housing market But there’s another, lesser-known group that shares responsibility – the 7.3 million Americans who lost their homes during the housing crisis and have been suffering with wrecked credit ever since. In the Southern California market, that’s 264,562 mostly first-time homeowners who got hit. Daren Blomquist, vice president of Irvine real estate data group RealtyTrac, calls them “boomerang buyers.” And he says they’re poised to play a big role in a recovery. That’s because the first wave of foreclosed homeowners is past the seven-year window they need to repair credit and qualify for a new mortgage. “There will be a portion of them who never want to be homeowners again. But painful memories fade with time, and some of them will realize homeownership can be a smart financial decision,” Blomquist said. As they trickle back into the market over the next eight years, boomerangs will boost demand. The rub, of course, is that investors who picked up those foreclosed homes when prices hit bottom have once again driven up prices. In the Valley, the average home price hovers around $550,000 – a tough reality for buyers who don’t bring any equity to the table. What’s their alternative? Looking into lower-cost, farther afield markets like the Antelope Valley, hard hit in 2007. “How far are people willing to move away from their jobs to own a home?” Blomquist asked. “It’s the same question that got people into trouble last time around.” – Karen E. Klein

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