A new Harris Interactive Survey commissioned by Tulia.com and RealtyTrac.com shows that Americans are growing increasingly less willing to buy foreclosed properties.
The survey, conducted between November 5-9, is the latest in a series of polls commissioned by the two on-line real estate marketplaces. The last one was held between May 1 and 5, 2009.
Only 43 percent of 2,033 participating U.S. consumers said they might be somewhat willing to buy a foreclosed property in the future. In May 55 percent expressed such willingness. The survey, however, found that real estate investors, current home owners in the market to trade up, and renters were more open to the idea than the general public.
The recently extended and revised tax credit which now grants $6,500 to eligible homeowners to purchase their next home may impact the "move up" market. 24 percent of homeowners surveyed said they were somewhat likely to trade up from their present home, of that segment 88 percent they would consider a foreclosed property.
Real estate investors are also more open to the idea of purchasing a foreclosure. Nearly one in four of the respondents said they were somewhat likely to purchase a second home or investment property and of those, 92 percent were at least somewhat likely to buy one that was bank-owned.
Renters showed the strongest interest in foreclosures with 57 percent at least somewhat likely to purchase such a property in the future, and among younger renters the probability was even higher. 61 percent of renters aged 18 to 34 and 65 percent of those 35 to 44 expressed a willingness to consider a foreclosure but only 40 percent of those above age 55 years said they would do so.
As might be expected, consumers are looking for bargains, but perhaps with a more realistic eye than at an earlier point in the troubled market. According to the November 2009 survey, 65 percent of respondents expected a discount of 30 percent or more. In a similar survey conducted in November, 2008 75 percent of respondents said they expected a discount of at least 25 percent and whooping three out of ten persons polled were looking for at least a 50 percent markdown from the price for a comparable non-foreclosed home.
Trulia.com CEO Peter Flint said of the survey, "Even during the darkest economic times, dreams don't die. Foreclosures are providing never before seen opportunities for new segments of homebuyers and allowing renters to become first time buyers, allowing investors to grab great deals and allowing families to trade up to larger homes. Until unemployment levels off and starts to get better, we expect foreclosures to continue to play a big role in the 2010 housing market."
The survey also showed that 95 percent of those participating were willing to invest money in renovations for foreclosed property and 55 percent were willing to spend at least 20 percent above the cost of the purchase to make improvements. Trulia found in a separate study that that the average person invests up to $30,000 when purchasing a new home for items such as furniture, paint, hot water heaters, etc. Consequently, the company said, consumers who purchase distressed properties will not only help reduce housing inventory levels but will pour additional money into other industries, helping to stimulate the economy as a whole.
The November survey showed that negative sentiment toward purchasing foreclosed houses had decreased slightly since the May poll. In November 81 percent of U.S. adults held negative sentiments compared to 85 percent in the spring.
The most prevalent negative sentiment was a fear of hidden costs which was held by 69 percent of respondents. A feeling that the process is risky was expressed by 48 percent, and a fear that the home will lose value was voiced by 35 percent.
Rick Shargo, senior vice president of RealtyTrac said "It is somewhat surprising that consumers cite hidden costs as the biggest negative aspect to buying a foreclosed home because most bank-owned home sales include the same title protections and other safeguards that are in place for non-foreclosure sales. As myths such as this are put to rest and consumers take more time to educate themselves on the process for purchasing foreclosures, they will be able to take advantage of the great bargains that currently exist in the real estate market."