Half of Americans Say Housing Recovery at Least Two Years Away
Almost six in 10 U.S. adults say a housing recovery is at least two years away, and more than a third say flawed lender practices are partially to blame, according to a survey by Trulia Inc. and RealtyTrac Inc.
Half of respondents in the poll had less faith in banks and the government following disclosures that lenders may have used false documents and signatures in taking back property, a practice known as robo-signing, the real estate data companies said today in a report. More than a third of respondents said the rebound won’t happen until 2014 or later.
“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,” Pete Flint, chief executive officer of San Francisco-based Trulia, said in the report.
Mounting foreclosures and an unemployment rate close to 10 percent are delaying a recovery in the industry that triggered the worst recession since the 1930s. Home sales tumbled 21 percent in the third quarter from a year earlier and half of U.S. metropolitan areas showed price declines, the National Association of Realtors reported last month.
Demand is unlikely to pick up soon amid a “catastrophic drop in confidence,” Robert Shiller, a Yale University economist and co-creator of the S&P Case-Shiller Index, said in a Nov. 30 Bloomberg Television interview. The home-price gauge has dropped 29 percent since peaking in 2006.
Pending sales of U.S. existing houses unexpectedly jumped by a record 10 percent in October, after a 1.8 percent drop the previous month, the National Association of Realtors said Dec. 2. Low mortgage rates and private payroll growth are stabilizing the housing market, according to Dean Maki, chief economist at Barclays Capital Inc. in New York.
Two-thirds of mortgage holders said they would consider trying to modify loan terms if they couldn’t afford their payment, Trulia and RealtyTrac said. Almost half would think about halting payments altogether if their home value fell below the loan amount. That’s an increase from the 41 percent who said in a May poll that they would “walk away.”
Almost half of U.S. adults said they would consider buying a foreclosed property, up from 45 percent in May, according to the survey. Distressed homes accounted for a quarter of all sales in the third quarter, Irvine, California-based RealtyTrac said in a report last week.
Foreclosed Property Risks
The number of Americans who said there were negative aspects to such purchases rose to 81 percent from 78 percent, today’s survey shows. Those who saw risk in buying foreclosed properties rose to 54 percent from 49 percent.
“The recent robo-signing controversy has added more confusion to an already complicated process,” said Rick Sharga, senior vice president for RealtyTrac.
About 35 percent of survey respondents said the foreclosure documentation issue will delay the housing recovery. Loan servicers including Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc. halted some home seizures as they investigated their practices.
Attorneys general from all 50 states opened a joint inquiry in October. The most likely outcome will be “massive fines” against loan servicers, with a minimal effect on the recovery, Sharga said on a conference call discussing the survey results.
“Americans clearly look at mortgage lenders as the primary guilty parties,” Flint said on the call. “The scandal has left a lingering bad taste.”
Decline in Filings
Foreclosure filings in November dropped as much as 25 percent from October because of the flap, Sharga said in an interview after the call. Lenders probably will resume default and auction notices and home seizures in the first quarter, he said.
The Trulia and RealtyTrac survey of 2,034 people was conducted Nov. 2-4 online within the U.S. by polling firm Harris Interactive. The sample included 1,329 homeowners, 1,000 of them with a mortgage, and 652 renters.
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