Boomerang buyers who lost it all see life after foreclosure

Greg Bailey got an amazing deal on a home in Summerlin.

Bailey, a local real estate agent, snagged the 2,470-square-foot beauty with city views in a September short sale for $230,000 – less than half of its $730,000 peak value.

But this isn’t your typical story about a moneyed investor swooping in with fistfuls of cash to snatch homes from the clutches of distressed homeowners.

You see, Bailey, too, got caught up in the market’s animal spirits, and is barely two years out of foreclosure himself.

Bailey is at the leading edge of a growing demographic: boomerang buyers, or locals who lost their home to foreclosure or short sale, but are jumping back into the market just two to three years after default.

Their numbers are small now; real estate agents and home builders say boomerang buyers don’t yet make up a big share of their clients. There’s evidence, though, that their ranks are set to rise noticeably, and that could have implications for local home sales and neighborhood vitality.

"It is definitely something people in the business are talking about," said Dennis Smith, president and CEO of local analysis firm Home Builders Research. "It is happening. These people are coming back, especially because it’s cheaper to own than to rent in a lot of cases."

Gauging potential effects means figuring out how many boomerang buyers are pacing the sidelines, waiting to get back in the game. If numbers are any indication, they are a substantial, untapped source of prospective buyers.

The Las Vegas Valley’s homeownership rate was 64 percent in 2000, and jumped to a high of 68.8 percent as housing boomed in 2006. By March, homeownership had slid to 48 percent.

It’s tough to say how many of those homeowners-turned-renters lost property to foreclosure or short sale, but Brian Gordon, a principal in local research firm Applied Analysis, said defaults were "probably a significant contributor" to the rental surge.

About 130,000 local households have lost a home to foreclosure or short sale in the downturn so far. And because the city’s population hasn’t fallen, it’s likely that many locals who defaulted are still here.

Those former homeowners are finding their way into offices of local mortgage companies and builders.


Rick Piette, owner of Premier Mortgage Lending in Las Vegas, said his company has funded nearly 200 loans in the last year through its Another Chance program for recently foreclosed buyers. That’s up from 10 or 12 Another Chance loans in the prior 12 months.

"It took a while for people to accept that there was financing available," Piette said. "Now, we’re busy as heck. Our phones are ringing off the hook."

Geoff Gorman, vice president of sales for Harmony Homes, said his company began to see an uptick in formerly foreclosed shoppers last spring. Today, 30 percent to 50 percent of visitors to the builder’s local new-home subdivisions were either foreclosed on or went through short sale. So far, they are mostly just looking. Some of them don’t realize they have to wait a while to buy. Others have already done their time, and are kicking the tires.

At a recent subdivision opening in Mountain’s Edge, a big share of traffic came from defaulted former owners who couldn’t buy today, but who planned on buying in six to eight months, after they had reached the two- or three-year mark following their foreclosure.

But wait a minute – don’t major financial crises stay on your credit report for up to 10 years? Well, yes. If you’re willing and able to pay a price, though, and you have few other risk factors in your borrowing history, you can get back into the market relatively quickly.

Typically, if you’re buying within two years of foreclosure or short sale, you’ll need 20 percent down, and you may be looking at a mortgage interest rate of 6.99 percent, about double today’s going rate of 3.5 percent. And forget about the loose paperwork standards of the boom. Lenders want full documentation, with verified income statements.

It also helps if foreclosed buyers were employed through the recession, Piette said. If borrowers have good payment histories outside of foreclosure, that’s in their favor, as well.

"If they were poor payers before (default), then they don’t fit our programs," he said.

Bailey, who didn’t borrow through Premier Mortgage, said he was surprised when he realized he could buy again just 24 months after he lost his home.

"I really thought that my life was over financially," he said.


Bailey’s problems began soon after he bought his home.

Bailey said he knew the market couldn’t keep appreciating at its breakneck, boom-era speed, but he – like many others – didn’t see housing’s cliff-dive coming. For Bailey, the market’s free fall was a "double whammy." Not only did he buy a home at the peak, but his and his family’s income came from housing. Revenue from the family’s real estate brokerage plummeted to "absolute zero," and the company burned through $200,000 in reserves. Bailey ran up credit card debt trying to pay expenses and keep the business open.

At home, things were just as tough. The 1,200-square-foot Summerlin house Bailey had purchased for $260,000 in 2006 was worth $115,000 by 2009. With no income and burgeoning credit card bills, he had no way to make payments.

"But it was at the beginning (of the crash), and getting the bank to talk was impossible. They just kept sending me these nonsensical packages," he said. "I couldn’t talk to anybody who had any kind of answer, so I ended up asking them to take back the property."

Bailey’s home was formally foreclosed on in July 2010. He became a renter, and stayed one until September, when he closed on his new home in The Paseos in Summerlin.

To make the deal happen, Bailey put down 20 percent and is paying a little more than 6 percent interest. He also had to pay 3 percent of his mortgage’s value in loan-origination fees, compared with 1 percent to 2 percent for the average buyer.

The cost was worth it for him.

"I just wanted to be a homeowner again," he says. "I wanted to do my own flooring and landscaping and have that pride of ownership. I wanted to have an asset."

Observers say more and more locals want the same thing.

"People who have been in that situation (default) are actually anxious to buy," Gorman says. "They’re nervous not to buy. They’re worried that prices are possibly going up. A lot of people lost a lot in the housing bust. Today’s prices and interest rates potentially make it possible to make some of that back up someday. I can’t help but think that today’s prospective buyer is thinking that."


Locals who have lived here five years or more have heard that refrain before: We’d better jump in now before we’re priced out! That panic drove people into a frothy market and set up the epic collapse.

Is it a good idea to follow that logic again, especially with potential buyers who have such a big, recent black mark on their record? After all, the vast majority of locals were never foreclosed on or short-sold their homes. Why gamble so soon on those who did?

Two reasons, experts say.

First, today’s lending climate is so strict that truly risky borrowers still can’t get a break.

"If someone got themselves into a situation that didn’t really work out, I’m not going to judge as to whether they’re worthy" of buying again, Gorman said. "But if they’re financially capable of qualifying to buy in today’s much more difficult borrowing atmosphere, then I think they deserve a home."

Second, getting the market close to where it was before boom and bust depends on giving lower-risk buyers a second chance, said Bailey, who folded his family’s brokerage into Coldwell Banker Premier Realty, where he now works.

"Anything that normalizes the market is good," he said. "You should have a certain percentage of owner-occupiers, and a certain percentage of investors and tenants. Once that becomes normal, the whole system will work."

How normal the system might be, and how well it might work, are questions still up for debate.

Increasing numbers of local buyers who went through default won’t necessarily help solve one of the market’s big problems: vast tracts of abandoned homes. More than 85,000 of the Las Vegas Valley’s 771,000 houses, condos and apartments were empty in the second quarter, for a vacancy rate of 11.1 percent, according to the Center for Business and Economic Research at the University of Nevada, Las Vegas.

Empty housing stock won’t fall if more locals buy, because those buyers are simply vacating a rental to move into their new place.

It’s a net-zero for inventory, said Gordon, of Applied Analysis.

What would help is if boomerang buyers from California and other states begin moving here in larger numbers to buy and live in a home, Gordon said.

Even if boomerang buyers don’t dent the housing inventory, they could have an effect on communities across the valley.

"There are positives when you think about pride of ownership, which can positively impact neighborhoods, including some neighborhoods that were hard-hit in the downturn and became predominantly renter-occupied," Gordon said. "As the dynamic shifts, we may see increased investments in landscaping and other improvements that will have properties holding their value better or gaining ground."

It’s also important to have local buyers in place when investors stop buying more than half of the city’s listings, the way they are today, Piette said.

"People ask me if I think I’m making things worse" with second-chance loans, he said. "My response is, ‘I don’t think things can be any worse.’ We have to stop looking backward and start looking forward, and part of that is getting Nevadans back into houses."

Greg Bailey said getting back into a house was an end to a trial-by-fire that eventually made it possible for him to begin a new life.

"Now, I sit on my porch and look at my view of the city, and I feel like it just had to be," Bailey said. "There was a light at the end of the tunnel."

Contact reporter Jennifer Robison at or 702-380-4512. Follow @J_Robison1 on Twitter.

Downtown Summerlin hosts its annual Festival of Arts
People crowd to Downtown Summerlin for the 23rd annual Summerlin Festival of Arts in Las Vegas, Sunday, Oct. 14, 2018. (Caroline Brehman/Las Vegas Review-Journal)
Clark County educators debate alternative grading systems
Spring Valley High School principal Tam Larnerd, Spring Valley High School IB coordinator Tony Gebbia and retired high school teacher Joyce O'Day discuss alternative grading systems. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Grandparents on the fire that killed three family members
Charles and Doris Smith talk about the night an apartment fire took the lives of three of their family members. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
New York artist Bobby Jacobs donated a sculpture to the Las Vegas Healing Garden
Bobby Jacobs, an artist from upstate New York, has spent much of the past year creating a sculpture of two separate angel wings. He donated the sculpture to the Las Vegas Healing Garden. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Weather will cool slightly through the end of the week
The weather will cool slightly through the end of the week., but highs are still expected to be slightly above normal for this year. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Mayor announces new public-private partnership
Mayor Carolyn Goodman announced the creation of the Mayor’s Fund for Las Vegas LIFE, a public-private partnership that will allocate money to the city’s neediest.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Fall fairytale gets cozy at Bellagio Conservatory
Bellagio Conservatory introduces its fall-themed garden titled "Falling Asleep." (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
What the house that Ted Binion died in looks like today
Casino heir Ted Binion died in this Las Vegas home in 1998. Current home owner Jane Popple spent over $600,000 to restore and modernize the home. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Rescue Mission employees terminated
Don James, a former employee for the Las Vegas Rescue Mission, talks about the day his team was terminated. (Erik Verduzco/Las Vegas Review-Journal)
Raiders Cupcakes at Freed's Bakery
Freed's Bakery will have Raiders-themed cupcakes available in store and for order during football season. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
51s fans say goodbye to Cashman Field
Las Vegas 51s fans said goodbye to Cashman Field in Las Vegas, Monday September, 3, 2018. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
51s owner Don Logan's last weekend at Cashman Field
Don Logan, owner of the Las Vegas 51s, gives a tour of Cashman Field before the team's final weekend using the field. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Metro Asst. Sheriff Brett Zimmerman on Aug. 8 officer-involved shooting
Metropolitan Police Department Assistant Sheriff Brett Zimmerman met with media Monday to discuss the details of the 14th officer-involved shooting of the year. (Madelyn Reese/ Las Vegas Review-Journal)
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program where community and business leaders joined to welcome students back with an inspirational welcome. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Star Trek fans on show’s enduring popularity
Star Trek fans at the Star Trek Convention 2018 talk about why they think the show has stayed popular across the years Thursday, August 2, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nonprofit provides clothing for homeless
Sydney Grover of Can You Spare A Story?, talks about how she founded the non-profit organization. (Marcus Villagran/Las Vegas Review-Journal)
Family remembers deceased mother
Family members of Adriann Gallegos remember her. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like