Even as a few rays of hope peek out for housing, a dark cloud of unlisted and unsold foreclosed homes threatens to further delay a recovery and undermine lenders' financials.
The government is riding in with new programs almost every week, including Monday, that may rescue lenders. But they also cause paralysis in the short term.
Lenders are holding "between 600,000 and 700,000 residential properties that are not on the multiple listing service (MLS)," said Rick Sharga, senior vice president at RealtyTrac, a foreclosure listing firm in Irvine, Calif.
This shadow supply isn't counted as part of the housing inventory. There were 3.8 million existing homes on the market in February, equal to 9.7 months' worth at the current sales pace.
Add in the shadow supply and selling all the available homes will take even longer, and that suggests prices have even further to fall.
This is a really big issue with the housing market -- and one that is woefully underreported.