Housing Market Makes Comeback, End to Foreclosure Crisis in Sight

Housing sector grows despite high unemployment, stagnant economy.
2:50 | 02/14/13

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Transcript for Housing Market Makes Comeback, End to Foreclosure Crisis in Sight
big headline today about the price of your home. A ray of light. There are new signs tonight that after six long years, the foreclosure kriss may be ending. At its peak, 367,000 homes in foreclosure. Today, less than half that. And david muir is here with the news for your neighborhood. About time, right? This is a huge drop tonight in foreclosures across the country. The housing market slowly recovering. Tonight what we didn't know. What's suddenly driving that drop in foreclosures. Reporter: It is a stunning drop. The number of treasured homes slipping away from american families -- dropping to its lowest level in six years. Down 28% across the nation a year ago. Foreclosures down to an eye-popping 65% in california. Suze orman quick to point out to us today. Some of the banks there -- pushed to to something else. Finally allowing homeowners to avoid foreclosure -- with what's called a short sale. And here's how it works. You owe $200,000, but your house is only worth $150,000. Reporter: Only worth 150,000 and the banks finally letting you sell for that. Reporter: Do you still owe $50 grand though? You're not still left with it, they wipe it off the board. The change comes too late for stephanie walker. She and her husband, bob, right before the collapse, they sold their property and used the profits to buy bigger. What so many did. Then, the crash. They lost work and lost their house. They moved back home with her parents in chicago, documenting it all on her blog. Love in the time of foreclosure. Hi, david. Welcome to our home. Reporter: But tonight, they're back on solid ground. And back in california. This is my favorite room in the house. This time, renting. But she admits, the low mortgage rates are so tempting. That is where you get yourself into trouble. The other day, I saw an open house sign and I thought, I kind of want to see that house, i want to see what it looks like inside. And my husband said no. Reporter: He said keep driving? Exactly. Reporter: Passing an open house even in this improving housing market. Which is smart. What do you say about the lesson in all of this? # I would say live below your means but within your needs. If you can afford to buy a 3,000 square foot home, buy a 2,000 square foot home. Reporter: What do you make of her advice? It's brilliant. But it's really hard. Shes that young family is smart to finish paying down their debt and rent and watch the market come back before they act. She says for families with solid jobs, a much different story. A new report, mortgage rates historic lows. It's a good time to buy if everything else in place for

This transcript has been automatically generated and may not be 100% accurate.

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