Renters Most Likely to Consider Foreclosure Purchase
Results of an ongoing survey from Trulia.com and RealtyTrac show a notable decrease in consumers’ willingness to buy foreclosed properties. According to an online survey conducted by Harris Interactive Nov. 5-9, 43% of adults age 18 or older said they are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to 55% who answered the survey between May 1-5.
However, the survey also found that there is strong interest in certain segments, including real estate investors, current homeowners looking to “trade up” to a larger property and renters.
Fifty-seven percent of adults ages 18-34 are at least somewhat likely to consider purchasing a foreclosed home, compared to a little less than one-quarter of those ages 55 and older (24%).
Current renters (57%) are more likely to consider purchasing a foreclosed home than current homeowners (38%).
One in two U.S. adults that are single/never been married are at least somewhat likely to consider purchasing a foreclosed property compared to 40% of adults that are married and 34% of adults that are divorced, separated or widowed.
In the difficult economic climate that currently exists, the companies say home foreclosures present significant opportunities for many consumers, including real estate investors. According to the survey, nearly one in four adults (23%) are at least somewhat likely to purchase a second home or investment property, and of these, 92% are at least somewhat likely to buy a foreclosed property.
With the recently expanded housing tax credit including a new $6,500 credit available to current homeowners looking to purchase a new home or trade up, interest levels in purchasing foreclosed properties will likely increase during the next several months. Currently, 24% of homeowners are at least somewhat likely to “trade up” to a larger home, and of these, 88% are at least somewhat likely to consider a foreclosed property, according to the survey.
Renters are showing strong interest in buying foreclosed properties with 575 at least somewhat likely to purchase a distressed home in the future.
Additionally, younger adult renters are more likely to purchase a foreclosed home: 61% of renters ages 18-34 and 65% of renters between the ages of 35-44 are at least somewhat likely to consider purchasing a foreclosure compared to only 40% of renters 55 years and older.
Consumers expect to get a lot for their dollar when purchasing foreclosed homes and are willing to invest as nearly two out of three U.S. adults (65%) expect a discount of 30% or more when buying a foreclosed property. Respondents in the Northeast expected the biggest discounts, with 43% expecting foreclosed homes to be discounted by 50% or more.
“Even during the darkest economic times, dreams don’t die. Foreclosures are providing never-before-seen opportunities for new segments of homebuyers and allowing renters to become first time buyers, allowing investors to grab great deals and allowing families to trade up to larger homes.” said Trulia co-founder and CEO Pete Flint. “Until unemployment levels off and starts to get better, we expect foreclosures to continue to play a big role in the 2010 housing market.”
According to the survey, 955 of U.S. adults are willing to invest money in renovations when purchasing a foreclosed property. Additionally, more than half (55%) of respondents are willing to spend 20% or more of the purchase price to make improvements on a distressed property.
Trulia found in a separate study that that the average person invests up to $30,000 when purchasing a new home for things such as furniture, paint, hot water heaters, etc. As more consumers purchase distressed properties, excess housing inventory levels will decrease and additional money will be poured into other industries, helping to stimulate the economy as a whole.
“The most active and qualified buyers in today’s market are highly interested in foreclosures, which is not surprising given the discount that often comes with a foreclosure purchase,” said Rick Sharga, senior vice president of RealtyTrac.
“It is somewhat surprising that consumers cite hidden costs as the biggest negative aspect to buying a foreclosed home because most bank-owned foreclosure sales include the same title protections and other safeguards that are in place for nonforeclosure sales. As myths such as this are put to rest and consumers take more time to educate themselves on the process for purchasing foreclosures, they will be able to take advantage of the great bargains that currently exist in the real estate market.”