Long Road Ahead for Housing Recovery

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The housing market still has a long way to go, at least according to Americans.

The vast majority of Americans (85%) believe the housing market will not recover until at least 2012, and nearly a quarter believe it will take until 2015 or longer, according to a new survey from Trulia and RealtyTrac, two leading real estate websites.

“More and more, American homeowners, -sellers and -buyers are tamping down their expectations for a swift recovery in the housing market and bracing themselves for a long, slow climb back to a healthy real estate market,” said Pete Flint, cofounder and CEO of Trulia, in a press release.  “Government incentives have come and gone and historic lows in interest rates have done little to spur recovery.”

The public’s concerns about the fate of the housing market have also been ramped up by the recent robo-signing controversy, in which several major banks improperly processed foreclosed properties. The study found that more than a third of Americans believe this will further delay the housing market’s recovery.

To some extent, the public’s fears match up well with many economists’ projections for the housing market.

Some estimate that there may be 10 million or more homes foreclosed on by 2012, which need to be processed and sold off before the housing market can be considered healthy again. This, combined with the unstable job market, has led analysts to predict that the housing market won’t actually hit bottom until 2014.

Armed with the belief that there may be no end in sight for the housing market’s troubles, Americans seem to be changing their attitudes toward home ownership.

The survey, which is based on interviews with more than 2,000 adults in the U.S., found that nearly half of all homeowners (48%) would at least consider walking away from their mortgage if their home was underwater, an increase of 7% from six months prior when these websites released a similar survey.

Moreover, Americans are now increasingly more likely to consider purchasing a foreclosed property, with 49% of those surveyed now considering this option, compared to 45% six months ago. The major incentive, according to the survey, is that the majority of consumers believe they can get a foreclosed home for at least 30% cheaper than a similar piece of property on the market that hasn’t been foreclosed.

Recent reports also support this assumption, and RealtyTrac found that the average sales price of foreclosed property sold off in the third quarter this year was 32% cheaper than the property would have been otherwise.

However, it’s important to consider the hidden costs when purchasing a foreclosed property. As Jeff Brown noted in a recent MainStreet article, the lender who controls the sale of the home “may require the buyer to pay administration and processing fees that can come to around 1% of the sales price. The buyer also could be required to pay delinquent taxes and homeowners' association dues.”

Of course, many times, foreclosure sales do indeed have a happy ending, as one our readers recently found out.

"My husband and I were very patient and had a patient realtor. No one trashed the home, although the weeds were over 6 ft high & neighbors were grumbling," said Phyllis Griesse Bahr, who purchased a short sale property with her husband back in May of this year. "No regrets, though! Very good deal.”

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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