Home Buyers Less Interested in Foreclosures

Irvine, CA, Dec. 16, 2009--Although interest remains high, home buyers are less willing to buy foreclosed properties than they were six months ago, according to a new survey.

The percentage of Americans at least somewhat likely to consider buying a foreclosed home fell to 43 percent in November, sharply below May's 55 percent, according to a survey by Harris Interactive.

The survey was conducted Nov. 5-9 on behalf of Trulia.com, a real estate search engine, and RealtyTrac, which tracks foreclosures.

Buyer expectations are becoming more realistic, Trulia Chief Executive Pete Flint said.

Next year "government interventions will start to disappear, shadow inventory will hit the market and mortgage rates will start to rise" to around 6 percent from under 5 percent, he said. "We're in a false state of stability."

Shadow inventory includes houses that banks now hold but have yet to put up for sale.

Double-digit unemployment will push more owners into foreclosure, further destabilizing the housing market and pressing prices down another 5 to 10 percent, said Flint.

Demand for foreclosed properties, which are often deeply discounted compared with other homes on the market, is of particular concern. RealtyTrac expects over 3 million properties will receive at least one foreclosure notice this year, up from a record 2.3 million last year.

About half of those properties will ultimately go back to banks, RealtyTrac said last week.

Foreclosures could rise to 4 million in 2010, RealtyTrac Senior Vice president Rick Sharga said.