Buyers demand foreclosures for less

Is the bloom off foreclosure buying? During a news conference Tuesday, Pete Flint, the co-founder and chief executive of real estate search engine Trulia, and Rick Sharga, senior vice president of online foreclosure marketplace RealtyTrac, discussed a survey taken on their behalf by Harris Interactive that suggests buyers have reservations about purchasing a foreclosure.

Says a joint news release issued Tuesday, “In this recent study, conducted during a three-day period in November, 80% of U.S. adults are now concerned with negative aspects, citing hidden costs, risky process, homes losing value and personal connection with foreclosure as the core concerns. To compensate for perceived risks, consumers expect hefty discounts on foreclosed homes. More than 75% of consumers think they should pay at least 25% less for a foreclosed home, with 3 in 10 consumers expecting a discount of at least 50% less than a comparable home not in foreclosure.”

Additional survey findings:

* 56% of single/never-married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 60% in May.

* 43% of married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50% in May.

* 42% of divorced/separated/widowed adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50% from May.

During the Q&A;, Flint and Sharga generally agreed that housing prices would continue to decline and foreclosures rise in 2009 but were hopeful that prices would stabilize and flat-line in 2010, then start to increase over the next couple of years.

As for the holiday foreclosure moratorium announced by Fannie Mae and Freddie Mac, that will just make 2008 seem a little better and 2009 a little worse. Look for a “hangover” of bank-owned homes to usher in the new year.