As foreclosures reach record levels, a survey released today shows that people are less willing to buy these troubled properties.

"Negative sentiment associated with buying foreclosures" increased several percentage points between the November survey and one in April, RealtyTrac Inc. chief economist Rick Sharga said during a conference call with search engine

Buyers are demanding discounts of 25 percent to 50 percent compared with the price of a comparable home not in foreclosure, because "they are concerned that these properties will continue to lose value," Sharga said.

Nationally, the average discount is 31 percent, although some individual properties are discounted as much as 87 percent. In some areas of central California, discounts are 70 percent, he said.

Peter Flint of said 80 percent of 2,033 adults surveyed last month focused on the "negative" aspects of foreclosure, citing hidden costs and loss of value as concerns.

"What is significant about the findings," Flint said, "is that just as the market is flooded with foreclosures, people are hesitant to buy them."

Foreclosure sales have increased from 15 percent of all home transactions to about 40 percent nationally, rising to 80 percent in the hardest-hit areas, Sharga said.

So far in 2008, foreclosure filings are running 44 percent above 2007 levels, affecting 2.6 million households.

"The numbers are staggering, and the delaying tactics of foreclosure moratoriums have had little effect on the numbers," Sharga said.

Flint said housing prices would continue to decline through 2009 until foreclosure numbers stabilized.

By 2010, the median national existing-home price will be $160,000, compared with $183,000 today, though that will boost sales to five million for the year, if fixed-rate mortgages fall to 4.5 percent or lower, Flint said, if the government gets more aggressively involved. The current rate is 5.53 percent.

The latest signal is from the IRS, which said today that it would accelerate a process so federal tax liens do not inhibit efforts to refinance or restructure a mortgage.

Lower rates and government action may help new home buyers, "but," Flint said, "cutting the foreclosure rate is a critical first step."