American expectations for housing market recovery falter

SAN FRANCISCO: As more cities across the nation experience double dip in home prices, about 54% of US adults believe recovery in the housing market will not happen until 2014 or later, according to an online survey from April 15 to 19.

In a previous survey conducted six months ago, 42% of American adults said they thought the market would turn around by 2012 or had already turned around. Now, only 23% continue to think this will happen, found the survey among 2,018 US adults aged 18 and over.

The survey by online real estate resource portal Trulia and Realty Trac, the leading online marketplace for US foreclosure properties tracked American attitudes towards foreclosed homes since 2008.

“Most Americans, as our latest survey revealed, overestimated how quickly the housing market would bounce back, but when it does, it will likely be a long and gradual process. Looking at the recent double dips in home prices, I expect the rest of 2011 to be volatile for real estate,” said Trulia CEO Pete Flint in a statement recently.

“On the flip side, mortgage rates won’t stay low forever and even if home prices continue to fall for a bit, now is still a good time to enter the housing market. In my eyes, we have another 18 months until we start to see signs of price stability in the housing market.”

“Our survey reflects a growing perception among potential homebuyers that the housing recovery is still a long way off,” said Rick Sharga, senior vice president of RealtyTrac. “Demand remains weak, loans are increasingly difficult to qualify for, and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover,” Flint added.

With recent reports criticising the underperformance of the Obama administration’s Home Affordable Modification Programme and the Home Affordable Foreclosure Alternatives Programme, Americans are increasingly adamant about repealing these initiatives entirely. This debate appears to run contrary to what Americans ask of their government as the housing market struggles to recover.

According to the survey, 45% of American adults say the government is not doing enough to prevent foreclosures. Only 17% say too much is being done while 16% say they are doing the right amount and 22% say they are not sure.

The widespread prevalence of distressed homeowners facing foreclosures in today’s market is one reason why negative sentiment towards the government may be so high. About 30% of homeowners self-reported that they have or know someone who has applied for or received a loan modification, stopped paying their mortgage, foreclosed, walked away or short sold their home.

More than half of US renters (56%) and 47% of current homeowners are at least somewhat likely to purchase a foreclosed home. Along with having some concerns about hidden costs, a risky buying process and loss in home value, many potential buyers expect to save money if they buy a foreclosure versus a similar non-foreclosed home. In fact, American adults expect to pay 38% less for a foreclosed home than a similar home that was not in foreclosure — not too far above the average discount of 36% on sales of bank-owned homes compared with sales of homes not in foreclosure, according to the RealtyTrac 2010 Foreclosure Sales Report.

This article appeared on the Property page, The Edge Financial Daily, May 27, 2011.

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