The city of New Orleans, Louisiana currently has less than half its pre-Katrina population of around 500,000 people. Efforts to help people return are hampered by a lack of housing and officials say it could take many more months to make many flood-ravaged areas habitable again.

One New Orleans store's ruined merchandise

Millions of dollars in merchandise is being cleaned out of stores in New Orleans because of mold.

But it is not just the merchandise; mold is often all over the interior of shops and offices.

That also holds true for private homes, thousands of which are uninhabitable even though they are structurally sound.

One of thousands of uninhabitable houses in the Gulf coast hit by Hurricane Katrina

In the New Orleans Uptown neighborhood, Brian O'Neill and a team of hired workers have gutted his house – tearing out everything but the supporting beams and outer walls. Even now, O'Neill faces the daunting task of eliminating toxic mold. He is especially concerned because his wife is pregnant with twins.

"That is one of my biggest concerns is bringing babies in here with that stuff,” he told us. “I don't know if I am over-reacting or not, but it is certainly an issue. There is certainly mold in there. Some people say you can clean it with bleach, some people say it will never go away."

Making matters worse, many homeowners, like Brian O'Neill, are finding that insurance companies are not paying for the full cost of renovation. Coordination of the entire recovery effort is carried out by the Federal Emergency Management Agency, known as FEMA.

Mark Misczak

FEMA supervisor Mark Misczak says surveys show that, in spite of the obstacles, most people in New Orleans and southern Louisiana want to return.  "I cannot say I am surprised. There is definitely a sense of home and community that people want to get back to,” he says. “I do feel, however, that people are currently being asked that question without a clear picture of what the total Gulf coast recovery is going to look like."

Mark Misczak says frustration runs high and FEMA gets much of the blame, but he says the agency is making progress.

"More than $4.3 billion has been delivered directly to individuals and households, either a check that was issued to them or a direct deposit into their checking (bank) account."

An instant community of trailers provided by FEMA

FEMA has also provided hotel lodging and on-site trailers or mobile homes for thousands of displaced people, although it estimates only 37 percent of those needing temporary housing in Louisiana have received it.

Residents still cannot return to areas that have no electricity, sewage or other basic services.

William Lord comes from Houston every week to work on his home in New Orleans East.

William Lord

"A lot of people from the east [side of New Orleans] are waiting for the city to say when they can get permits for gas and electric,” says Mr. Lord, “and when they can just get the main city structures like sewage, water, power and stuff like that."

Some parts of the city may remain without such services for many months to come.