88 Percent of Current Homeowners Looking to “Trade Up” To a Larger Home Are Willing to Consider Purchasing a Foreclosure
SAN FRANCISCO, December 15, 2009 – Trulia.com, the best place to start a real estate search, and RealtyTrac, the leading online marketplace for foreclosure properties, today released the latest results of an ongoing survey tracking home buyers’ attitudes towards foreclosures. The new online survey conducted on their behalf between November 5-9, 2009 by Harris Interactive® showed a notable decrease in consumers’ willingness to buy foreclosed properties, with 43 percent of U.S. adults age 18 and above indicating that they are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to the 55 percent of U.S. adults age 18 and above surveyed online by Harris Interactive® between May 1-5, 2009. However, the survey also found that there is strong interest in certain segments, including real estate investors, current home owners looking to “trade up” to a larger property and renters.
Listen to conference call with RealtyTrac SVP Rick Sharga and Trulia CEO and Co-Founder Pete Flint discussing the survey.
Real Estate Investors
In the difficult economic climate that currently exists, home foreclosures present significant opportunities for many consumers, including real estate investors. According to the survey, nearly one in four US adults (23 percent) are at least somewhat likely to purchase a second home or investment property, and of these, 92 percent 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 percent of homeowners are at least somewhat likely to “trade up” to a larger home, and of these, 88 percent are at least somewhat likely to consider a foreclosed property, according to the survey.
Renters are showing strong interest in buying foreclosed properties with 57 percent at least somewhat likely to purchase a distressed home in the future. Additionally, younger adult renters are significantly more likely to purchase a foreclosed home: 61 percent of renters ages 18-34 and 65 percent of renters between the ages of 35-44 are at least somewhat likely to consider purchasing a foreclosure compared to only 40 percent of renters 55 years and older.
Discounts & Opportunities
Consumers expect to get a lot for their dollar when purchasing foreclosed homes and are willing to invest: nearly two out of three U.S. adults (65 percent) expect a discount of 30 percent or more when buying a foreclosed property. Respondents in the Northeast expected the biggest discounts, with 43 percent expecting foreclosed homes to be discounted by 50 percent 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, 95 percent of U.S. adults are willing to invest money in renovations when purchasing a foreclosed property. Additionally, more than half (55 percent) of respondents are willing to spend 20 percent 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.
Unnecessary Negative Stigma
“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 non-foreclosure 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.”
The November survey found slightly lower levels of negative sentiment towards purchasing foreclosed properties; 81 percent of U.S. adults compared to 85 percent in May 2009. Comparison of top concerns among those who think there are negative aspects of purchasing a foreclosed home between May 2009 and November 2009 surveys:
Process is risky
Home will lose value
Most Likely to Buy Foreclosures
- 57 percent of U.S. 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 percent).
- Current renters (57 percent) are more likely to consider purchasing a foreclosed home than current homeowners (38 percent).
- One in two U.S. adults (50 percent) that are single/never been married are at least somewhat likely to consider purchasing a foreclosed property compared to 40 percent of adults that are married and 34 percent of adults that are divorced/separated/widowed.
To listen to a replay of Pete Flint and Rick Sharga discussing the results of the survey and other insights into the real estate market, click here.
For more information about Trulia or to experience the power of a Trulia search, please visit http://www.trulia.com/.
For more information about RealtyTrac and to access its nationwide foreclosure data, please visit http://www.realtytrac.com/.
This November 2009 survey was conducted online within the United States by Harris Interactive via its QuickQuery(SM) online omnibus service on behalf of Trulia between November 5-9, 2009 among 2,203 U.S. adults aged 18 years and older. Results were weighted to be representative of the total U.S. adult population on the basis of region, age within gender, education, household income, race/ethnicity, and propensity to be online. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Ken Shuman. The May 2009 survey was conducted online within the United States by Harris Interactive via its QuickQuery(SM) online omnibus service on behalf of Trulia between May 1-5, 2009 among 2,397 U.S. adults aged 18 years and older. Results were weighted to be representative of the total U.S. adult population on the basis of region, age within gender, education, household income, race/ethnicity, and propensity to be online. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Ken Shuman.
About Trulia, Inc.
Trulia, Inc. has revolutionized real estate search by offering a rich, intuitive user experience to help consumers find homes for sale, track local price trends, compare properties and neighborhood data all at the hyper-local level. Trulia Voices, the largest real estate community on the web, allows home buyers, sellers, agents and real estate enthusiasts to ask questions, receive advice and blog on topics such as the buying and selling process, foreclosures, refinancing and more. Trulia’s user-friendly search can also be accessed on more than 170 websites as a result of our media partnerships. Trulia has received a number of awards, including the 2009 Webby Award for real estate. For more information, visit http://www.trulia.com/.
About RealtyTrac Inc.
RealtyTrac (http://www.realtytrac.com/) is the leading online marketplace of foreclosure properties, with more than 1.5 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data. Hosting more than 3 million unique monthly visitors, RealtyTrac provides innovative technology solutions and practical education resources to facilitate buying, selling and investing in real estate. RealtyTrac’s foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures.
About Harris Interactive
Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us – and our clients – stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.
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