Legal entanglements and well-intentioned home-owner-assistance efforts have slowed the pace of foreclosures, but eventually many of these distressed homes will hit the market anyway.

Some observers say these delays are prolonging the housing crisis and creating a shadow inventory that will cause more housing market pain.

There's going to be a flood [of bank-owned homes] listed for sale at some point, says John Burns, a real-estate consultant based in Irvine, Calif.

Burns believes that when the onslaught hits, it will drive down home prices still further. On average, he expects home prices to fall another 6 percent next year.

Ivy Zelman, CEO of Zelman & Associates research firm, estimates that there are 3 million to 4 million foreclosed homes that will hit the market in the next few years. How traumatic the impact will be depends on whether the flow of homes going up for sale resembles a fire hose or a garden hose or a drip, she says.

Source: The Wall Street Journal, Ruth Simon and James R. Hagerty (09/23/2009)