Interest in purchasing a foreclosure is significantly down year over year, and the failure of government programs to reach troubled homeowners could exacerbate the backlog of distressed inventory threatening recovery, according to a quarterly survey from two real estate websites.

Trulia.com and RealtyTrac, online foreclosure marketplaces, released an online survey yesterday tracking homebuyers' attitudes toward foreclosures. The new survey, conducted May 10-12 by Harris Interactive, showed that U.S. adults likely to consider purchasing a foreclosure dropped to 45 percent from the year-ago 55 percent.

“;Although fewer consumers expressed interest in buying a foreclosed home than a year ago, the actual sales of bank-owned properties (REOs), along with sales of properties in the foreclosure process, continue to increase - accounting for more than 30 percent of total sales in the first quarter of 2010,”; said Rick Sharga, senior vice president for RealtyTrac.

Government programs are not taking foreclosures off the market, either.

“;For every borrower who avoided foreclosure through HAMP (Home Affordable Modification Program) last year, another 10 families lost their homes, said Pete Flint, Trulia's co-founder and chief executive officer.

“;It seems clear that government programs will not reach the overwhelming majority of homeowners in trouble,”; Flint said. “;Combined with decreased consumer interest around purchasing a foreclosure, it may take longer than anticipated to see true health return to the real estate market.”;

As a result, 2011 is expected to be the peak year for foreclosure activity, and real estate experts do not expect “;healthy”; growth in home prices over the next few years, Sharga said.

“;We are looking at a long, slow recovery that probably won't feel much better until 2013,”; he said.

Still, most homeowners surveyed desired to keep their investment. Only 1 percent of homeowners surveyed said that walking away would be their first choice. If their mortgage were to go “;underwater,”; 41 percent would consider walking away, while 59 percent would not, they said.

Banks also are delaying the process by waiting to send out default notices and allowing loans to stay delinquent longer, Sharga said.

“;There are somewhere between 750,000 and 800,000 REOs in our active database, and of those, less than 30 percent are for sale,”; he said.

At the end of April, there were still 2,474 active bank-owned properties in Hawaii that had not been resold, according to RealtyTrac. The average length of time for a notice of trustee's sale to become an REO in Hawaii increased to 119 days in 2009 from 98 days in 2007, RealtyTrac said.

Banks must carefully gauge foreclosure absorption to prevent significant price drops, Sharga said.

“;Across the country, we see a savings of 20 to 30 percent off the market price ,”; Sharga said, adding that regions with higher concentrations of distressed properties will see prices drag.

Despite the discounting, foreclosures are not always popular with consumers, he said. As many as 78 percent of the adults surveyed identified downsides to purchasing distressed property. Hidden costs, risk and the belief that homes are still losing value were the most common negative sentiments.

More positively, foreigners also have begun to buy up distressed inventory in resort and vacation destinations in Hawaii, New York and California, Sharga said.

“;Hawaii has always been a target for real estate investors and for homeowners looking for vacation homes,”; he said. “;It's likely that as the market bottoms out and the economies of some of the countries from which these buyers come get healthier, Hawaii will see its inventory of foreclosure properties gobbled up pretty quickly.”;