With home prices threatening to double-dip nationwide, most consumers don’t expect a housing recovery in the near term, according to a survey from property search and marketing site Trulia and foreclosure data site RealtyTrac.
Market research firm Harris Interactive conducted an online survey on behalf of the sites from April 15-19, 2011. The survey garnered 2,018 responses from U.S. adults — 1,257 were homeowners, 704 were renters, and 57 identified themselves as neither.
More than half of respondents, 54 percent, believe the housing market won’t recover until 2014 or later, up from 34 percent in a similar survey in November 2010.
While many experts predicted an improvement in the housing market this year, “We’re actually backtracking,” said Pete Flint, Trulia’s CEO.
“Foreclosures still continue to be a major part of the housing market, and as a result housing prices continue to drop. Even with mortgage rates still below 5 percent, the fact is, against a backdrop of joblessness, (even high affordability has) made consumers more skeptical where the housing market is concerned.”
For instance, renters who were interested in buying a home said they would wait two years before doing so, Flint said.
He predicted it would be another 18 months before home prices begin to stabilize.
“I expect the rest of 2011 to continue to be volatile,” he said. “Buyers can anticipate a big summer clearance on real estate,” he added.
Rick Sharga, senior vice president of RealtyTrac, expects prices to bottom this year.
“We’re not expecting a bounce off that bottom. (Prices will) flat-line there for the next couple of years and (we won’t see) prices increasing in any real manner until, best-case scenario, 2014,” Sharga said.
While most survey respondents also chose 2014 as the light at the end of the tunnel for the housing market, 24 percent of respondents — the same share as in the November survey — believe the market will recover in 2013. Some 15 percent of respondents say the market will recover in 2012, down from 27 percent six months ago.
Three percent think the market will recover at the end of this year, down from 10 percent six months ago. The same share, 5 percent, thought the market had already recovered.
Neither Flint nor Sharga believed the possibility that the mortgage interest deduction would be eliminated was keeping buyers away from the market.
Nevertheless, about 40 percent of surveyed renters said they won’t ever buy a home. “That suggests that it’s really a bad time to take away the incentives for people to buy homes,” Sharga said.
While there has been considerable debate at the national level surrounding the Obama administration’s Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives Program (HAFA), the survey results indicate that nearly half (45 percent) of Americans want the government to do more to prevent foreclosures.
Of the respondents, 17 percent said too much was being done, while 16 percent the right amount was being done. More than one-fifth of respondents, 22 percent, were not sure.
“Many of these programs have been nothing more than a Band-Aid on a hatchet wound,” Flint said.
The prevalence of foreclosures in the market is likely a major factor in negative sentiment toward the government, the survey report said.
“Almost one-third (30 percent) 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 … sold their home (in a short sale),” the report said.
Interest in foreclosures remains high. Among renters, 56 percent said they are at least somewhat likely to purchase a foreclosed home. Among homeowners, 47 percent said they are.
On average, respondents expected to pay 38 percent less for a foreclosed home compared to a similar, nondistressed home. That discount is fairly realistic — the average discount on an REO (bank-owned) home in 2010 was 36 percent, according to RealtyTrac.
However, “that interest isn’t quite high enough to burn through the inventory that’s out there,” Sharga said.
“Even if banks weren’t to foreclose on a single property this year, we have a nearly two-year supply of REOs before we burn through the inventory.”
“At the moment, there are over 900,000 properties on the banks’ books, but less than 30 percent are listed for sale. So there’s a 600,000 backlog. There is plenty of distressed inventory on the market with a boatload yet to come,” he added.
Sharga said he doesn’t see banks flooding the market with REO properties.
“(That) would cause another double dip in home prices and conceivably cause another wave of foreclosures as home prices (decline). They will put them on the market probably only as fast as they can sell them,” he said.
Foreclosure activity has fallen year-over-year for the past seven months, he said, largely due to controversy surrounding foreclosure documentation and procedures that prompted many major lenders to temporarily halt some foreclosure proceedings.
Lenders have had to refile tens of thousands of foreclosure proceedings, and those proceedings have received far more scrutiny in judicial foreclosure states, Sharga said. Law firms that used to handle such proceedings have also gone out of business or been ordered to stop handling them, so other firms have had to be trained to handle foreclosures, he added.
“I believe most of these things will be nailed by the end of the second quarter and we’ll start to see foreclosure activity where it should be sometime in the third quarter,” Sharga said.