Fewer homebuyers are likely to consider purchasing a foreclosed property in the future, according to a survey conducted by the online real estate companies Trulia.com and RealtyTrac. Conducted in early November, 43% of US adults indicate they are at least somewhat likely to consider purchasing a foreclosed home, a drop from 55% in the same survey conducted in May. However, real estate investors, current homeowners looking to “trade up” and renters showed strong interest. According to the survey, 23% of adults are at least somewhat likely to purchase a second home or an investment property. Of those, 92% are interested in the foreclosure market. Those looking to “trade up” make up 24% of homeowners and of those 88% are looking at foreclosures. They could be spurred by the expansion of the homebuyer tax credit that extends a new $6,500 credit to current homeowners looking to move into a larger home. HousingWire will explore this "trade up" demand in an upcoming magazine issue. According to the survey, renters show the strongest interest in buying foreclosed properties as 57% are somewhat likely to make a purchase in the future. Of younger renters, aged 18-34, 61% are interested in foreclosures, and 65% of renters between the ages of 35-44 showed interest as well. The survey showed that consumers expect a good return on their investment in foreclosed homes. Almost two-thirds, 65%, of adults expect a discount of 30% or more when buying a foreclosure. In the Northeast, 43% of respondents expect a 50% discount or higher. But as 95% of adults are willing to invest money in a foreclosed property, many cited hidden costs as the worst aspect of buying one. Of those surveyed, 81% saw a negative stigma with foreclosure purchases, a jump from 69% when the survey was conducted in May. “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.” Half who saw a negative stigma with purchasing a foreclosure noted the risky process of purchasing a foreclosed home, and 35% pointed out that the home would lose value. Pete Flint, Trulia.com’s CEO and co-founder, said in a conference call Tuesday that housing prices will continue to fall another 5-to-10% as sales volumes flatten out. In 2010, he anticipates a double-dip in the economy and another downturn in 2010 as government incentives disappear, the shadow inventory of foreclosures hits the market and interest rates start to reach 6%. Rick Sharga, senior vice president of RealtyTrac, said that a broader recovery is in store as the shadow inventory will be a very “gradual, measured” trickle into the market. He expects that the amount of homes receiving a foreclosure notice will reach 3.2m and possibly 4m in 2010. Numbers in 2011 would only be “marginally better,” Sharga said, and the market should see an improved foreclosure rate on a month-to-month basis at the end of 2012. He added that the shadow inventory of foreclosures should be moved through the market by 2013. Write to Jon Prior.