Marketing Forecast from Ad-ology

December 28 2009 | Kathy Crosett

By any count, there is a significant number of foreclosed properties either already on the market or about to be listed for sale. RealtyTrac analysts expect the number of foreclosed homes to affect the housing market through 2014. But according to Harris Interactive, U.S. consumers aren’t always lining up to purchase these properties. Only 43% of potential  home buyers indicated an interest in these kinds of properties in November, 2009. This is down from 55% in May 2009. This change in attitude comes even as purchasers understand they might be able to land a property at a significant discount.

The government has already taken steps to stir home buying activity by offering an $8,000 tax credit for first-time buyers and a $6,500 tax credit for trade-up buyers. What else will banks do to increase the appeal of these properties, some of which have unattractive liens attached to them? Survey results indicate that buyers expect deeper discounts, of up to 30%.

Most importantly, there are specific demographic groups who are more likely to purchase foreclosed homes:

• Younger renters: 57%
• Current homeowners who are looking to trade up: 24%
• Never married adults: More likely than married, divorced or widowed consumers to look at  foreclosed homes.

As banks work off the excess inventory of foreclosed homes, look for them to target these specific demographic groups with marketing campaigns. Banks have an incentive to actively market these homes to reduce their carrying costs. In addition, the survey results  indicate a healthy interest in the part of buyers to invest significantly in improving the foreclosed homes. That kind of activity can also generate future  loan business for banks.

[Source:  Adler, Lynn. Foreclosure buyer demand dips as supply mounts, Reuters, 12.15.09]