A online survey reveals a notable decrease in consumers' willingness to buy foreclosed properties. The survey, conductedÂ in early November by Harris Interactive on behalf of Trulia.com and RealtyTrac, shows that 43% of U.S. adults age 18 and above indicated that they are at least somewhat likely to consider purchasing a foreclosed home in the future. When Harris Interactive conducted the same survey in may, 55% of adults polled said they would consider buying a foreclosed home.
However, the November survey also found some segments – including investors, current homeowners looking to ‘trade up’ to larger properties, and renters – have a strong interest in foreclosed homes.
Nearly one in four U.S. adults (23%) are at least somewhat likely to purchase a second home or investment property, and of these, 92% are at least somewhat likely to buy a foreclosed property, Harris Interactive found.
With the recently expanded housing tax credit including a new $6,500 credit available to current homeowners looking to purchase a new home or trade up, interest levels in purchasing foreclosed properties will likely increase during the next several months. Currently, 24% of homeowners are at least somewhat likely to trade up to a larger home, and of these, 88% are at least somewhat likely to consider a foreclosed property, according to the survey.
Renters are also showing strong interest in buying foreclosed properties, with 57% at least somewhat likely to purchase a distressed home in the future. Additionally, younger adult renters are significantly more likely to purchase a foreclosed home: 61% of renters ages 18-34 and 65% of renters between the ages of 35-44 are at least somewhat likely to consider purchasing a foreclosure, compared to only 40% of renters 55 years and older.
Consumers expect to get a lot for their dollar when purchasing foreclosed homes, and they are willing to invest: Nearly two out of three adults (65%) expect a discount of 30% or more when buying a foreclosed property. Respondents in the Northeast expected the biggest discounts, with 43% expecting foreclosed homes to be discounted by 50% or more.
"The most active and qualified buyers in today's market are highly interested in foreclosures, which is not surprising given the discount that often comes with a foreclosure purchase," says Rick Sharga, senior vice president of RealtyTrac.
According to the survey, 95% of adults are willing to invest money in renovations when purchasing a foreclosed property. Additionally, more than half (55%) of respondents are willing to spend 20% or more of the purchase price to make improvements on a distressed property.
The November survey also found slightly lower levels of negative sentiment towards purchasing foreclosed properties – 81% of U.S. adults compared to 85% in May 2009. Consumers surveyed cited hidden costs as the largest negative drawback to buying a foreclosure – a point that Sharga finds surprising, because "most bank-owned foreclosure sales include the same title protections and other safeguards that are in place for non-foreclosure sales."