The stigma against buying a foreclosed property eroded in recent years with buyer interest in foreclosure acquisitions tripling over the past two and a half years, Realtor.com said Wednesday.
Ninety-two percent of potential foreclosure buyers surveyed by Realtor.com plan to live in the foreclosure they purchase rather than leverage it as an investment tool.
About 1.5 million foreclosures were backlogged leading up to the signing of the mortgage servicer settlement, creating a situation where there is now a significant supply of inventory for homebuyers to choose from among distressed real estate.
Homebuyer interest in foreclosures from October 2009 to today grew by 159%. In the current market, more than 64% of homebuyers say they are likely to acquire a foreclosure, up from only 25.3% two and a half years ago.
About 6.9% of today’s homebuyers are interested in acquiring a foreclosure as an investment, the report said.
“We see a combination of factors coming into play explaining the unexpected interest in foreclosures,” said Steve Berkowitz, chief executive officer of Move Inc., which operates Realtor.com.
“Reductions in supply, expectations that home prices will rise, and changing attitudes toward foreclosures are contributing to the increased demand, especially among owner-occupants,” he said.
At the same time, Realtor.com discovered that 55.7% of surveyed Americans believe a backlog of 1.5 million foreclosured properties will be released in the next year, lowering home values. Those most concerned are homeowners in the Midwest with 62.2% saying they are concerned with an onslaught of foreclosure sales lowering prices. Most of the backlogged foreclosures are expected to be released in the nation’s more than 20 judicial foreclosure states as properties make their way through the court-directed foreclosure process. Most of those states are in the Midwest and Northeast.