Wednesday, December 8, 2010

Americans see housing recovery still far off, survey found

More than half of Americans surveyed last month said they expect a housing market recovery won’t happen until at least 2013, and revelations about robo-signers abusing the foreclosure process have contributed to their attitude, the leaders of two real estate websites said Tuesday.

“As if prospective buyers and sellers needed more to be concerned about, the robo-signing issue caused a ‘what’s next?’ fear to surface in the minds of consumers who, frankly, have lost faith in banks and their government to make good decisions,” said Pete Flint, chief executive officer of Trulia, which released the study Tuesday along with RealtyTrac.

The underlying problem with the languishing market, however, is unemployment, Flint said. If unemployment remains high – especially at rates like those in South Florida – the housing market cannot recover.

“We do see the housing market to continue a slow path to recovery, but at the end of the day it comes down to jobs,” he said.

Those who are employed now “are afraid to take the risk … on a long-term financial commitment because they’re afraid they may be next” to lose their jobs, said Rick Sharga, senior vice president of RealtyTrac.

The most recent figures for South Florida show that Miami-Dade’s unemployment level is 13 percent and Broward’s is 10.1 percent. Statewide, Florida’s unemployment rate is 11.9 percent.

The survey found that about 70 percent of renters said it would be at least two years before they would buy a property.

But some buyers aren’t waiting. Veronica Cervera, president of Miami-based Cervera Real Estate, said condo buyers are keeping her busy and she believes their actions indicate a more robust market than those surveyed realize.

“Money trickles down,” she said. “To me it’s a good sign when the people who have more purchasing power start spending. Then everybody starts making money.”

She said sales don’t compare to the boom, but that wasn’t a “real market.” But this year, she’s confident enough in sales that she’s hiring new staff. Her buyers are, in turn, buying furniture, installing flooring and hiring painters.

“There are signs that it’s going to continue to be a healthy market,” she said.

Epicenter

South Florida, already one of the most troubled housing markets in the country, also has found itself at the center of a scandal in the last few months that has led some lenders to halt foreclosures temporarily. Several law firms here are under investigation for possibly mishandling thousands of foreclosure documents.

The November survey of more than 2,000 people found that because of those paperwork problems, in which foreclosure documents may not have been properly reviewed or were fabricated, half of U.S. adults have less faith in lenders, banks and the government. Another 35 percent believe the robo-signing issue will delay the housing market’s recovery, although so far, the paperwork problems don’t appear to have led to many foreclosures being overturned.

Walking away

In addition, the survey found that more Americans are willing to walk away from their homes if they owe more than they are worth than were willing to do so six months ago. The survey showed 48 percent of homeowners with a mortgage would consider a strategic default, compared to 41 percent in May.

It is difficult to assess how many people whose homes have been repossessed to date actually chose that path, Sharga said.

More encouraging: Two-thirds of adults surveyed said if they had trouble paying their mortgage, they would consider asking their lender for a modification of the terms on their loan.

More than 2.8 million homes received foreclosure notices last year, Sharga said, a record number that is likely to be topped by the end of 2010.

Source: The Miami Herald, Nirvi Shah. Distributed by McClatchy-Tribune Information Services.

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