Survey: Foreclosure scandal will delay recovery

The robo-signing scandal is going to delay any recovery in the housing market until after 2012, a survey from online real estate firms RealtyTrac and Trulia.com revealed.

Americans continue to grapple with uncertainty about the housing market, especially after lenders admitted in October that thousands of foreclosure documents were signed by employees who had not read or verified them.

The survey found that 58 percent of respondents expect a housing recovery to take at least two more years, with 22 percent pegging it for 2015 or later. The most compelling findings of the survey are people's attitudes about the robo-signing debacle and how they're dealing with negative equity in their homes, Trulia chief executive Pete Flint said Tuesday in a conference call.

"The housing crisis is now in its fourth year. I'd love to say we've taken a few steps forward, but the reality is we're stuck in the mud," Flint said.

Government incentives have come and gone and historically low interest rates have done little to spur recovery, he said.

"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," Flint said.

Nearly half (48 percent) of homeowners with a mortgage admitted that they would consider walking away if they're underwater, or owing more than their home is worth, compared with 41 percent in the May survey.

Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac, said foreclosure filings will be "artificially low" in the fourth quarter because of the robo-signing scandal, probably declining by 20 percent to 25 percent.

Still, 2010 is going to be another record year in terms of real estate-owned homes, or bank-owned homes, Sharga said. The nation is on pace to see 3 million households receive foreclosure notices, up from 2.8 million last year. Next year will also set records in both foreclosure filings and REOs, he said.

Against the backdrop of high unemployment and rising foreclosures, home prices will continue to decline, Sharga said.

Las Vegas home prices, which have already fallen 60 percent from their 2006 peak, are expected to tumble another 5 percent to 7 percent, in line with national projections, Sharga said.

"If you separated nondistressed sales and distressed sales, in most places there's a big difference in prices. Las Vegas is the exception," Sharga told the Review-Journal. "Your percentage of distressed sales is so high that it's really taken the price of the rest of the inventory down with it."

Sharga suggested that perhaps Las Vegas is closer to the bottom than other cities that have not seen the same degree of foreclosure activity.

Flint of San Francisco-based Trulia said he doesn't see any short-term positive movement in Las Vegas home prices.

"Las Vegas has really had the brunt of it," he said. "Yes, they (prices) will continue falling. How much? I don't have a crystal ball."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.