Prospective Homebuyers Interested in Foreclosures at a Discount

A new study conducted by ""Trulia"":http://www.trulia.com and ""RealtyTrac"":http://www.realtytrac.com found that 56 percent of U.S. renters and 47 percent of current homeowners are at least ""somewhat likely"" to purchase a foreclosed home.

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Along with having some concerns about hidden costs, a risky buying process, and still-declining home values, many potential buyers expect to save money if they buy a foreclosure. In fact, the companies' survey found that on average, respondents expect to pay 38 percent less for a foreclosed home than a similar home that was not in foreclosure.

RealtyTrac says their expectations are not too far above the average discount of 36 percent it's currently seeing on sales of bank-owned REO homes.

Ken Shuman, a spokesperson for Trulia, said, ""According to our latest data, it is more affordable to buy a home than to rent in 78 percent of major U.S. cities. With concerns of rising inflation and the potential for rising interest rates, now is a good time for people to buy and we may not be in this environment for much longer.""

The Trulia-RealtyTrac survey also polled respondents on the federal government’s efforts to help struggling homeowners. Forty-five percent of those surveyed said the government is not doing enough to prevent foreclosures. Only 17 percent say too much is being done, while 16 per-

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cent say they are doing the right amount and 22 percent were undecided.

The widespread prevalence of distressed homeowners facing foreclosures in today’s market is one reason why negative sentiment toward the government may be so high, according to the companies’ report.

Almost one-third (30 percent) of homeowners said they themselves have, or they know someone who has experienced trouble with their mortgage situation and applied for a loan modification, stopped making their payments, been foreclosed on, simply walked away, or sold their home through a short sale transaction.

As more cities across the nation experience double dips in home prices, more than half (54 percent) of those surveyed believe recovery in the housing market will not happen until 2014 or later.

In a previous survey conducted six months ago, 42 percent of American adults said they thought the market would turn around by 2012 or had already turned around. Now, only 23 percent continue to hold this sentiment.

“Most Americans, as our latest survey revealed, overestimated how quickly the housing market would bounce back, but when it does, it will likely be a long and gradual process,” said Pete Flint, co-founder and CEO of Trulia. “Looking at the recent double dips in home prices, I expect the rest of 2011 to be volatile for real estate….In my eyes, we have another 18 months until we start to see signs of price stability in the housing market.”

Trulia and RealtyTrac have regularly conducted these surveys since 2008 to track consumers’ attitudes toward foreclosed homes and the housing market recovery.

""Our survey reflects a growing perception among potential homebuyers that the housing recovery is still a long way off,"" commented Rick Sharga, RealtyTrac SVP. ""Demand remains weak, loans are increasingly difficult to qualify for, and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover.""