Few Americans are looking for a recovery in the housing industry over the next calendar year according to a survey of attitudes toward housing and foreclosure conducted last month by Harris Interactive.  The survey was sponsored by two online housing companies, RealtyTrac which tracks foreclosure data and Trulia.com, a real estate data base.

The online survey involved 2,034 adults including 652 renters and 1,329 homeowners of whom 1000 currently have a mortgage. Responders were not randomly selected and responses were weighted to account for the respondents' propensity to be on-line and, where necessary, to bring the age, sex, race/ethnicity, education, income, and geographic location into line with their proportions in the general population.

Only 15 percent of those surveyed thought a recovery in the U.S. housing market had already occurred or would happen before the end of next year.  Twenty-seven percent, were looking for recovery in 2012 while 24 percent thought it would happen the following year and 12 percent in 2014.  Nearly a quarter (22 percent) thought the recovery would be delayed until or even beyond 2015.

At a press conference accompanying the survey release, Trulia CEO Peter Flint said "It is hard to believe, but one-fifth of Americans think we are in for up to five more years of these depressed market conditions.  We appear to be pretty much stuck in the mud."  Flint said he sees continued unemployment and the tightened lending standards as two factors that will hold back recovery.

Robo-signing has had an effect on popular sentiment; 44 percent of respondents said they now have less faith in mortgage lenders and banks, and 24 percent less faith in the government while an additional 35 percent believe the issue will delay recovery.  Only 6 percent thought that robo-signing would have no effect on the market.

Rick Sharga, senior vice president of RealtyTrac, said that he expects that robo-signing will ultimately result in some massive fines against servicers, possibly some criminal penalties, and a noticeable delay in recovery.  There will be no long lasting impact such as a need to redo foreclosures or undo REO sales.  Flint said that robo-signing could be positive in the long run if the Attorneys General are able to negotiate settlements with servicers and investors that will increase the speed and efficiency of foreclosure and short sales

Two-third of participants with mortgages said they would consider contacting their lender and seeking a modification if they became unable to make mortgage payments, but mortgage default is apparently becoming more acceptable.  Forty-eight percent of those participating in the survey said they would consider walking away from their homes if their mortgage were underwater compared to 41 percent who responded this way in a similar survey conducted last May.  Flint said this 20 percent increase is striking and if it continues there could be an epidemic of such defaults in future years.  Americans are clearly more concerned about making sound financial decisions, he said, than about the possibility of losing their largest investment.  There was a distinct difference between genders on this question; 41 percent of women said they would consider a strategic default compared to 57 percent of male respondents and Flint speculated that this could be a reflection of men tending to view the home as an investment while women put more emotional weight on homeownership.  

Buying a foreclosed home would be a consideration for 49 percent of survey participants, up from 45 percent in May but those who see drawbacks have increased from 78 percent to 81 percent.  Of those who expressed concern about such a purchase, 66 percent were worried about hidden costs, 54 percent believed the process is risky, and 33 percent were afraid the home would lose value.  Fear of hidden costs and declining value were each 2 percentage points below survey responses in May, but the belief that buying at foreclosure could be risky increased by 5 percentage points.

97 percent of those interviewed would expect a discount when buying a foreclosed home and 35 percent would expect that discount to be at least 50 percent off of the price of a similar market-rate transaction; 67 percent expect a 30 percent discount.  RealtyTrac's most recent foreclosure sales report found the average discount is 32 percent.

Sharga said he expects that 2011 will exceed even 2010 in setting records for foreclosure filings and homes taken into REO.  Home sales continue to be too weak to absorb foreclosures so inventory of unsold houses will increase further impacting prices and new home construction.  Of additional concern, he said, is recent data showing that college educated adults are now losing the fastest growing of the unemployed so more mortgages may be going into default.  Studies have shown he said that there is a foreclosure for every six to eight job losses.

While there could be another 5 to7 percent decline in home prices nationally, Flint said there are some bright spots.  The Raleigh Durham area, Oklahoma City, Omaha, Austin and Salt Lake City are all expected to have strong upticks in housing prices in the short term.