Trulia.com, a top site for homebuyers, sellers and renters, and RealtyTrac, the leading online marketplace for foreclosure properties, Tuesday released the latest results of an ongoing survey tracking homebuyers’ attitudes toward foreclosed homes. Results of the survey conducted online from November 2-4, 2010 by Harris Interactive on behalf of Trulia and RealtyTrac showed that Americans continue to grapple with uncertainty about the housing market, with 58 percent of U.S. adults expecting recovery to take at least another two years.
Image Courtesy of Eric Cahan/Corbis
As a result of the recent robo-signing debacle, half of U.S. adults expressed that they now have less faith in mortgage lenders, banks and the government. Another 35 percent believe the robo-signing issue will delay the housing market’s recovery, while only 6 percent of U.S. adults think the robo-signing issue will have no effect on the recovery of the housing market.
“More and more, American homeowners, -sellers and -buyers are tamping down their expectations for a swift recovery in the housing market and bracing themselves for a long, slow climb back to a healthy real estate market. Fifty-eight percent believe recovery will happen after 2012 and more than one in five U.S. adults believe recovery won’t happen until 2015 or later,” says Pete Flint, co-founder and CEO, Trulia. “Government incentives have come and gone and historic lows in interest rates have done little to spur recovery. Then, as if prospective buyers and sellers needed more to be concerned about, the robo-signing issue caused a ‘what’s next?’ fear to surface in the minds of consumers who, frankly, have lost faith in banks and their government to make good decisions.”
Under Water and Out of Options
Nearly half (48 percent) of homeowners with a mortgage admitted that they would consider walking away if their mortgage was under water, an increase compared with May 2010, when only 41 percent said they would consider walking away if their mortgage was under water. Interestingly, men (57 percent) are more likely than women (40 percent) to consider strategic default as an option for dealing with negative equity. If they became unable to pay the mortgage payments on their current primary residence, two-thirds of U.S. adults with mortgages said they would consider calling the lender and trying to modify the terms of the loan as their first option. The next most popular solution is to have a tenant move in to contribute to the mortgage, but only 10 percent of U.S. adults would do this.
Interest in Buying a Foreclosure
Nearly half (49 percent) of U.S. adults are at least somewhat likely to consider purchasing a foreclosed property, up from 45 percent in May 2010. Despite the rising interest in buying a foreclosed home, an increasing number of U.S. adults also recognize negative aspects to buying a foreclosure. Over the past six months, the number of U.S. adults who believe there are downsides to buying foreclosed properties has increased to 81 percent, from 78 percent in May 2010. Among those who think there are negative aspects to purchasing a foreclosed home, the top concerns about purchasing a foreclosed property between November 2010 and May 2010 include:
Expected Discount on Foreclosure Purchase
Two-thirds (67 percent) of U.S. adults would expect to pay at least 30 percent less for a foreclosed home than a similar home that was not in foreclosure, and one-third of U.S. adults (35 percent) would expect to pay at least 50 percent less for a foreclosed home. Overall 97 percent of U.S. adults would expect at least some discount on a foreclosed home. “It seems like consumer expectations and market realities are beginning to align when it comes to foreclosure discounts,” says Rick Sharga, senior vice president, RealtyTrac. “During the third quarter, foreclosure homes sold for an average of 32 percent less than homes not in foreclosure. It’s also not surprising that we’ve seen an increase in negative sentiment toward foreclosure purchases, where the recent robo-signing controversy has added more confusion to an already complicated process.”
***This November 2010 survey was conducted online within the United States by Harris Interactive via its QuickQuery(SM) online omnibus service on behalf of Trulia between November 2-4, 2010 among 2,034 U.S. adults aged 18 years and older. The sample included 1,329 homeowners, 1,000 of whom currently have a mortgage, and 652 renters. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.