Survey: Americans Split on Timing of Housing Recovery. Discounted Prices Expected

Few Americans are looking for arnrecovery in the housing industry over the next calendar year according to arnsurvey of attitudes toward housing and foreclosure conducted last month byrnHarris Interactive.  The survey wasrnsponsored by two online housing companies, RealtyTrac which tracks foreclosurerndata and Trulia.com, a real estate data base.</p

The online survey involved 2,034rnadults including 652 renters and 1,329 homeowners of whom 1000 currently have arnmortgage. Responders were not randomly selected and responses were weighted tornaccount for the respondents’ propensity to be on-line and, where necessary, tornbring the age, sex, race/ethnicity, education, income, and geographic locationrninto line with their proportions in the general population.</p

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

At a press conferencernaccompanying the survey release, Trulia CEO Peter Flint said “It is hard to believe, but one-fifthrnof Americans think we are in for up to five more years of these depressedrnmarket conditions.  We appear to bernpretty much stuck in the mud.”  Flintrnsaid he sees continued unemployment and the tightened lending standards as twornfactors that will hold back recovery.</p

Robo-signing has had anrneffect on popular sentiment; 44 percent of respondents said they now have lessrnfaith in mortgage lenders and banks, and 24 percent less faith in therngovernment while an additional 35 percent believe the issue will delayrnrecovery.  Only 6 percent thought thatrnrobo-signing would have no effect on the market. </p

Rick Sharga, senior vicernpresident of RealtyTrac, said that he expects that robo-signing will ultimatelyrnresult in some massive fines against servicers, possibly some criminalrnpenalties, and a noticeable delay in recovery. rnThere will be no long lasting impact such as a need to redo foreclosuresrnor undo REO sales.  Flint said thatrnrobo-signing could be positive in the long run if the Attorneys General arernable to negotiate settlements with servicers and investors that will increasernthe speed and efficiency of foreclosure and short sales</p

Two-third of participants withrnmortgages said they would consider contacting their lender and seeking arnmodification if they became unable to make mortgage payments, but mortgagerndefault is apparently becoming more acceptable.  Forty-eight percent of those participating inrnthe survey said they would consider walking away from their homes if theirrnmortgage were underwater compared to 41 percent who responded this way in arnsimilar survey conducted last May.  Flintrnsaid this 20 percent increase is striking and if it continues there could be anrnepidemic of such defaults in future years. rnAmericans are clearly more concerned about making sound financialrndecisions, he said, than about the possibility of losing their largestrninvestment.  There was a distinctrndifference between genders on this question; 41 percent of women said theyrnwould consider a strategic default compared to 57 percent of male respondentsrnand Flint speculated that this could be a reflection of men tending to view thernhome as an investment while women put more emotional weight on homeownership.  </p

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

97 percent ofrnthose interviewed would expect a discount when buying a foreclosed home and 35rnpercent would expect that discount to be at least 50 percent off of the pricernof a similar market-rate transaction; 67 percent expect a 30 percentrndiscount.  RealtyTrac’s most recentrnforeclosure sales report found the average discount is 32 percent. </p

Sharga said he expects thatrn2011 will exceed even 2010 in setting records for foreclosure filings and homesrntaken into REO.  Home sales continue tornbe too weak to absorb foreclosures so inventory of unsold houses will increasernfurther impacting prices and new home construction.  Of additional concern, he said, is recentrndata showing that college educated adults are now losing the fastest growing ofrnthe unemployed so more mortgages may be going into default.  Studies have shown he said that there is arnforeclosure for every six to eight job losses.</p

While there could bernanother 5 to7 percent decline in home prices nationally, Flint said there arernsome bright spots.  The Raleigh Durhamrnarea, Oklahoma City, Omaha, Austin and Salt Lake City are all expected to havernstrong upticks in housing prices in the short term.

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