Trulia.com, along with RealtyTrac, today released the latest results of a tracking study conducted on their behalf by Harris Interactive® showing notable gains in consumers’ willingness to buy foreclosed properties, with 55 percent of U.S. adults indicating that they are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to the 47 percent of U.S. adults who indicated the same in November 2008. In the current market, U.S. adults believe foreclosed homes are an even greater bargain opportunity than before, with 40 percent expecting to pay at least 50 percent less for a foreclosed home, compared to only 31 percent of U.S. adults surveyed in November 2008. The May 2009 survey also found that 74 percent of U.S. adults familiar with President Barack Obama’s Mortgage Relief Program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.
While overall consumer interest in buying foreclosed homes has increased, the current wave of the study also found higher levels of negative sentiment around purchasing foreclosed properties. In November of 2008, 80 percent of U.S. adults felt that there were negative aspects to purchasing a foreclosed home. In the current survey, the number of U.S. adults concerned with negative aspects has risen to 85 percent. Among these 85 percent, 71 percent cite hidden costs as their top concern, 46 percent believe the process is risky and 31 percent are concerned that the home will lose value. Not surprisingly, consumers expect hefty discounts on foreclosed homes, with 83 percent believing they should pay at least 25 percent less for a foreclosed property, perhaps to compensate for perceived risks.
“As interest in purchasing foreclosed homes increases, competition is heating up with traditional sellers competing with bank-owned prices. Across the U.S., 24 percent of existing homes for sale on the market have seen at least one price reduction in order to stay competitive, creating a tremendous opportunity for consumers to buy homes at significantly lower prices,” said Pete Flint, co-founder and CEO of Trulia. “Competition amongst sellers, along with the newly created economic incentives, has created the most significant discounts that we’ve seen in decades, presenting opportunities for first-time home buyers and families looking to trade up to a bigger home.”
“Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market. People want the best deals they can find and they are willing to go outside of their comfort zones if it means they can buy more home for less money,” said Rick Sharga, senior vice president of RealtyTrac. “Consumers who educate themselves on the opportunities available will likely be rewarded.”
Most Likely to Buy Foreclosures
- Two-thirds of U.S. adults between the ages 18-44 (66 percent) would consider purchasing a foreclosed home, compared to a little more than one-third of those ages 55 and older (38 percent). Respondents aged 45-54 fell in between, with 53 percent indicating that they would be at least somewhat likely to consider a foreclosed property.
- Current renters (68 percent) are more likely to consider purchasing a foreclosed home than current homeowners (49 percent).
- U.S. adults with children under 18 living in their household also show an increased likelihood to consider foreclosure properties, with 66 percent indicating they would be at least somewhat likely to purchase one, compared to 49 percent of those without children under 18 in the household.
First Quarter 2009 PMI U.S. Market Risk Index (4th Quarter 2008 data) 10 Riskiest and 10 Most Stable MSAs out of 50 Largest MSAs 10 Riskiest of the 50 Largest MSAs Risk Risk Affordability Rank MSA Index Index High Miami-Miami Beach-Kendall; FL 99.9 100.79 High Riverside-San Bernardino-Ontario; CA 99.9 100.20 High Ft. Lauderdale-Pompano Beach- 99.9 103.77 Deerfield Beach; FL High Los Angeles-Long Beach-Glendale; CA 99.9 98.62 High Las Vegas-Paradise; NV 99.8 138.02 High Tampa-St. Petersburg-Clearwater; FL 99.7 108.91 High Orlando-Kissimmee; FL 99.6 111.05 High Santa Ana-Anaheim-Irvine; CA 99.0 98.59 High Jacksonville; FL 98.9 105.56 High Phoenix-Mesa-Scottsdale; AZ 98.8 116.85 10 Most Stable of the 50 Largest MSAs Risk Risk Affordability Rank MSA Index Index Minimal Pittsburgh; PA 1.7 139.96 Minimal Cleveland-Elyria-Mentor; OH 2.3 175.93 Minimal Columbus; OH 2.4 155.65 Minimal Dallas-Plano-Irving; TX 2.5 131.27 Minimal Fort Worth-Arlington; TX 2.5 135.09 Minimal Houston-Sugar Land-Baytown; TX 2.7 133.63 Minimal Memphis: TN-MS-AR 2.8 159.96 Minimal San Antonio; TX 3.8 122.68 Minimal Charlotte-Gastonia-Concord; 5.7 133.47 NC-SC Minimal Indianapolis-Carmel; IN 9.6 135.85
LoanPerformance HPI Largest CBSAs Ranking:
12 Month HPI Change %
|Riverside-San Bernardino-Ontario CA||
|Miami-Miami Beach-Kendall FL||
|Las Vegas-Paradise NV||
|Cape Coral-Fort Myers FL||
|Los Angeles-Long Beach-Glendale CA||
|Fort Lauderdale-Pompano Beach-Deerfield Beach FL||
|San Diego-Carlsbad-San Marcos CA||
|Tampa-St. Petersburg-Clearwater FL||
|San Francisco-San Mateo-Redwood City CA||
|Minneapolis-St. Paul-Bloomington MN-WI||
|Edison-New Brunswick NJ||
|New York-White Plains-Wayne NY-NJ||
|St. Louis MO-IL||
|Atlanta-Sandy Springs-Marietta GA||
|Salt Lake City UT||
|San Antonio TX||
|Houston-Sugar Land-Baytown TX||
|Austin-Round Rock TX||
Source: First American CoreLogic, LoanPerformance HPI, Single-Family Detached as of January 2009
Behind the Numbers
To find them, we asked Moody’s Economy.com to compile a list of the country’s real estate markets that are furthest from recovery. Moody’s looked at the country’s Census-defined metro areas–including metropolitan and micropolitan statistical areas–with populations over 500,000 and prepared forecasts through 2011. They then compared them with prices in the second quarter of 2008, the latest figures available, to calculate how far prices will likely fall before reaching bottom.
Las Vegas, Nev.
Palm Bay, Fla.
Fort Lauderdale, Fla.
Boise City, Idaho
West Palm Beach, Fla.
Salt Lake City, Utah
Santa Ana, Calif.
Los Angeles, Calif.
Cape Coral, Fla.
Read the entire article “America’s 25 Weakest Housing Markets” written by Deborah Orr, at Forbes.com
|12-Month Change By Top CBSAs (Core Based Statistical Areas) as of September 2008|
|Riverside-San Bernardino-Ontario, CA||-28.56%|
|Los Angeles-Long Beach-Glendale, CA||-28.46%|
|Miami-Miami Beach-Kendall, FL||-27.38%|
|Las Vegas-Paradise, NV||-26.20%|
|Cape Coral-Fort Myers, FL||-24.92%|
|San Diego-Carlsbad-San Marcos, CA||-24.90%|
|Fort Lauderdale-Pompano Beach-Deerfield Beach, FL||-22.46%|
|San Francisco-San Mateo-Redwood City, CA||-16.76%|
|Tampa-St. Petersburg-Clearwater, FL||-15.36%|
|Minneapolis-St. Paul-Bloomington, MN-WI||-9.76%|
|New York-White Plains-Wayne, NY-NJ||-5.92%|
|Atlanta-Sandy Springs-Marietta, GA||-5.79%|
|Edison-New Brunswick, NJ||-5.75%|
|St. Louis, MO-IL||-3.59%|
|Salt Lake City, UT||-0.34%|
|San Antonio, TX||2.73%|
|Houston-Sugar Land-Baytown, TX||3.53%|
|Austin-Round Rock, TX||4.04%|
Source: First American CoreLogic, LoanPerformance HPI, Single-Family Detached Series as of September 2008
Existing home sales including single-family, townhomes, condominiums and co-ops – fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million units in October from a downwardly revised pace of 5.14 million in September, and are 1.6 percent below the 5.06 million-unit level in October 2007.
Lawrence Yun, NAR chief economist, said consumer hesitation is understandable. “Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” he said. “We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.”
Total housing inventory at the end of October slipped 0.9 percent to 4.23 million existing homes available for sale, which represents a 10.2-month supply2 at the current sales pace, up from a 10.0-month supply in September.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.20 percent in October from 6.04 percent in September; the rate was 6.38 percent in October 2007. “Mortgage interest rates have been moving up and down in a historically low range, with the fixed rate down to 6.04 percent last week,” Yun noted.
Even with the overall decline, Yun identified a number of areas with solid sales gains from a year ago, including many California and Florida markets, as seen previously, as well as Boston, Minneapolis, and Denver.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the need for professional assistance is growing. “Navigating the transaction process is easier said than done without professional assistance in today’s market,” McMillan said. “Proper valuation when many homes are being sold below replacement construction costs is very challenging – buyers remain in the driver’s seat.”
The national median existing-home price3 for all housing types was $183,300 in October, down 11.3 percent from a year ago when the median was $206,700. There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less.
Single-family home sales declined 3.3 percent to a seasonally adjusted annual rate of 4.43 million in October from a level of 4.58 million in September, but are unchanged from a 4.43 million-unit pace in October 2007. The median existing single-family home price was $181,800 in October, down 11.2 percent from a year ago.
Existing condominium and co-op sales eased by 1.8 percent to a seasonally adjusted annual rate of 550,000 units in October from 560,000 in September, and are 12.0 percent below the 625,000-unit pace a year ago. The median existing condo price4 was $193,000 in October, which is 13.0 percent below October 2007.
Regionally, existing-home sales in the Northeast slipped 1.2 percent to an annual pace of 830,000 in October, and are 9.8 percent lower than a year ago. The median price in the Northeast was $241,700, down 9.8 percent from October 2007.
Existing-home sales in the West eased by 1.6 percent to an annual rate of 1.21 million in October but are 37.5 percent higher than October 2007. The median price in the West was $231,400, down 27.0 percent from a year ago.
In the South, existing-home sales declined 3.2 percent to an annual pace of 1.84 million in October, and are 10.2 percent below a year ago. The median price in the South was $161,100, which is 5.8 percent lower than October 2007.
Existing-home sales in the Midwest fell 6.0 percent in October to a pace of 1.10 million and remain 9.1 percent below October 2007. The median price in the Midwest was $149,400, down 6.7 percent from a year ago.
“As of July, nominal home prices declined 10.9 percent from a year ago. Our early August view of the data indicates a decline of 10.8 percent from a year ago. This continues the positive trend of no further acceleration in the pace of the rate of decline. Furthermore, in part because of the declines in house prices, our projection for pre-foreclosure and foreclosure filings through the end of 2008 is 3.2 million, an increase of just over 80 percent from a year ago.” said Mark Fleming, chief economist for First American CoreLogic. “The recent price trend is similar to the Massachusetts and Texas house price declines in the 1980s and 1990s that took approximately two years to bottom out. In both cases there was stabilization in the rate of decline before the lengthy recovery in price levels. There is reason to be cautiously optimistic because the price decline stabilization we observe in this cycle is necessary before any improvement in price levels occur,” added Fleming.
|12-Month Change By Top CBSAs (Core Based Statistical Areas) as of July 2008|
|Los Angeles-Long Beach-Glendale, CA||-27.95%|
|Riverside-San Bernardino-Ontario, CA||-26.93%|
|Miami-Miami Beach-Kendall, FL||-25.95%|
|Las Vegas-Paradise, NV||-25.13%|
|San Diego-Carlsbad-San Marcos, CA||-23.24%|
|Cape Coral-Fort Myers, FL||-23.12%|
|Fort Lauderdale-Pompano Beach-Deerfield Beach, FL||-20.97%|
|Tampa-St. Petersburg-Clearwater, FL||-15.82%|
|San Francisco-San Mateo-Redwood City, CA||-13.59%|
|St. Louis, MO-IL||-10.31%|
|Minneapolis-St. Paul-Bloomington, MN-WI||-9.09%|
|New York-White Plains-Wayne, NY-NJ||-7.68%|
|Atlanta-Sandy Springs-Marietta, GA||-6.93%|
|Edison-New Brunswick, NJ||-6.15%|
|Salt Lake City, UT||1.37%|
|San Antonio, TX||3.53%|
|Houston-Sugar Land-Baytown, TX||4.12%|
|Austin-Round Rock, TX||4.15%|
Source: First American CoreLogic, LoanPerformance HPI, Single Family Detached Series as of July 2008