WASHINGTON (4/21/15)--A large chunk of those who lost their homes in the throes of the housing market crash have re-entered, or will re-enter, the housing market in the coming years, according to recent research from the National Association of Realtors (NAR).
But an even greater amount of formerly distressed homeowners will be left out of the market, the research found.
NAR analyzed nearly 9.3 million homeowners who either went through foreclosure, received a deed-in-lieu of foreclosure, or made a short sale between 2006 and 2014, to determine how many now-creditworthy borrowers will re-enter the market in the coming years.
Nearly 1 million of these former homeowners have already bought a home, the research found, with an additional 1.5 million likely to purchase a home in the next five years.
On the other hand, millions will not be able to purchase a home because of lingering credit problems.
"While loose lending standards in the mid-2000s led to the rise in subprime buyers who ultimately became distressed owners, falling home prices and rising unemployment resulted in a large share of prime borrowers also defaulting or going through a short sale," said Lawrence Yun, NAR chief economist.
The research found that roughly 950,000 formerly distressed homeowners who were considered prime borrowers have regained eligibility for Federal Housing Administration or other similar financing programs, and have likely bought a house after reviving their credit.
But "the extended time needed to repair credit scores or save for a down payment, combined with 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," Yun said.