A very interesting survey was released by Trulia and RealtyTrac. Interest in buying foreclosed homes waned in November, but more interesting was the reason why.

Negative sentiment towards buying a foreclosed home has remained in the low 80% range. But in the survey, people expressed concern about hidden costs, the riskiness of the buying process (it can be annoying and nerve-racking), and--get this--fear that the home will lose value after the purchase.

Lenders better pay attention to this last one. If people think forelcosed homes will drop in value--and on average, they're purchased at a 33% discount--then what does it say about mortgages whose value exceeds the asset value securing it?

In other words, if people think the price of a foreclosed house will fall even further, what's the loan worth if it exceeds the value ofthe house?

Stay tuned on this one. It's as much a comment on the real estate market as a whole as it is the distressed property market. While the report surveyed the national scene, you have to believe the same thing is going on here in the Portland real estate market.