Nov. 27 - Home prices were up for the eighth straight month, in the latest good news signal from the housing market but some experts warn the backlog of foreclosed homes known as shadow inventory could mean the worst is not yet over. Rhonda Schaffler reports.
New York resident Steven Myers isn't benefitting from the housing recovery. He, along with hundreds of others, showed up at this homeowner assistance program with the goal of trying to keep his house. Myers is behind in his mortgage payments and is trying to renegotiate his mortgage with his bank. Think you're going to be able to save the house? SOUNDBITE: STEVEN MYERS, TROUBLED HOMEOWNER (ENGLISH) SAYING: "Don't know, really don't know. I'm hoping." Myers' foreclosed home is one of millions across the country that make up what's known as the housing market's shadow inventory. Shadow inventory refers to distressed homes that are somewhere in the foreclosure process. And experts say shadow inventory remains a threat to the speed of the housing recovery. So just how much foreclosed inventory is out there? While the level of shadow inventory has been decreasing in the past two years, current estimates range from 2.3 million homes to 6 million homes or higher. New Jersey resident Sushell Abraham is doing her part to reduce the shadow inventory pool. She bought this distressed home just a few weeks ago from a bank eager to make a deal. SOUNDBITE: SUSHELL ABRAHAM, DISTRESSED PROPERTY BUYER (ENGLISH) SAYING: "We put the offer in. The offer was lower than the asking price. The next day the bank came back with a counter offer. We accepted. So I think within three days we had a contract in place, which I thought was very - I was impressed." Perhaps it's not surprising the deal happened so fast. There's a flood of distressed properties in her area. There are two wild cards standing in the way of a more robust housing market recovery: tougher credit standards continue to make it difficult for would be homeowners to obtain credit. The other wild card? The economy. If the nascent recovery stumbles - and unemployment ticks higher - the housing rebound will stall and more homes could fall into foreclosure. Dan Alpert says the number of foreclosed homes currently on the market now is nothing compared to the potential amount of homes at risk. SOUNDBITE: DAN ALPERT, MANAGING PARTNER, WESTWOOD CAPITAL (ENGLISH) SAYING: "We have 11 million loans underwater, right, that's really where the pressure is. So you have what 51, 52 million loans left in the United States today, 11 million of them, 23 percent, are underwater and that's very, very devastating." SOUNDBITE: STEVEN MYERS, TROUBLED HOMEOWNER (ENGLISH) SAYING: "What are they going to do to me? The worst thing they can do is take my house." While Steven Myers tries to save his home.... others here will not be able to. And there simply aren't enough qualified buyers like Sushell Abraham who are able or eager to jump into the market. That's why experts say it will take at least three to four years to reduce the current amount of shadow inventory - assuming more homes don't fall into foreclosure. And that will cast a shadow on the pace of the housing rebound.