Survey Shows Home Buyers Less Interested in Foreclosed Properties
A new Harris Interactive Survey commissioned by Tulia.comrnand RealtyTrac.com shows that Americans are growing increasingly less willing to buy foreclosedrnproperties.
The survey, conducted between November 5-9, is the latest inrna series of polls commissioned by the two on-line real estate marketplaces. The last one was held between May 1 and 5,rn2009.
Only 43 percent of 2,033 participating U.S. consumers saidrnthey might be somewhat willing to buy a foreclosed property in the future. In May 55 percent expressed such willingness.rnThe survey, however, found that real estate investors, current home owners inrnthe market to trade up, and renters were more open to the idea than the generalrnpublic.
The recently extended and revised tax credit which now grantsrn$6,500 to eligible homeowners to purchase their next home may impact the “movernup” market. 24 percent of homeownersrnsurveyed said they were somewhat likely to trade up from their present home, ofrnthat segment 88 percent they would consider a foreclosed property.
Real estate investors are also more open to the idea ofrnpurchasing a foreclosure. Nearly one inrnfour of the respondents said they were somewhat likely to purchase a secondrnhome or investment property and of those, 92 percent were at least somewhatrnlikely to buy one that was bank-owned.
Renters showed the strongest interest in foreclosures withrn57 percent at least somewhat likely to purchase such a property in the future,rnand among younger renters the probability was even higher. 61 percent of renters aged 18 to 34 and 65rnpercent of those 35 to 44 expressed a willingness to consider a foreclosure butrnonly 40 percent of those above age 55 years said they would do so.
As might bernexpected, consumers are looking for bargains, but perhaps with a more realisticrneye than at an earlier point in the troubled market. According to the November 2009 survey, 65rnpercent of respondents expected a discount of 30 percent or more. In a similar survey conducted in November,rn2008 75 percent of respondents said theyrnexpected a discount of at least 25 percent and whooping three out of tenrnpersons polled were looking for at least a 50 percent markdown from the pricernfor a comparable non-foreclosed home.
Trulia.com CEOrnPeter Flint said of the survey, “Even during the darkest economic times, dreamsrndon't die. Foreclosures are providing never before seen opportunities for newrnsegments of homebuyers and allowing renters to become first time buyers,rnallowing investors to grab great deals and allowing families to trade up tornlarger homes. Until unemployment levelsrnoff and starts to get better, we expect foreclosures to continue to play a bigrnrole in the 2010 housing market.”
The survey alsornshowed that 95 percent of those participating were willing to invest money inrnrenovations for foreclosed property and 55 percent were willing to spend atrnleast 20 percent above the cost of the purchase to make improvements. Trulia found in a separate study that thatrnthe average person invests up to $30,000 when purchasing a new home for items suchrnas furniture, paint, hot water heaters, etc. rnConsequently, the company said, consumers who purchase distressedrnproperties will not only help reduce housing inventory levels but will pour additionalrnmoney into other industries, helping to stimulate the economy as a whole.
The Novemberrnsurvey showed that negative sentiment toward purchasing foreclosed houses hadrndecreased slightly since the May poll. rnIn November 81 percent of U.S. adults held negative sentiments comparedrnto 85 percent in the spring.
The mostrnprevalent negative sentiment was a fear of hidden costs which was held by 69rnpercent of respondents. A feeling thatrnthe process is risky was expressed by 48 percent, and a fear that the home willrnlose value was voiced by 35 percent.
Rick Shargo,rnsenior vice president of RealtyTrac said “It is somewhat surprising thatrnconsumers cite hidden costs as the biggest negative aspect to buying arnforeclosed home because most bank-owned home sales include the same titlernprotections and other safeguards that are in place for non-foreclosure sales.rnAs myths such as this are put to rest and consumers take more time to educaternthemselves on the process for purchasing foreclosures, they will be able torntake advantage of the great bargains that currently exist in the real estaternmarket.”
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