There's been a lot of talk regarding Shadow Inventory.  That is inventory that isn't currently on the market, but is either foreclosed on & the bank is holding the properties, waiting for an improved market, or inventory that is in the process of foreclosure.  Too much Shadow Inventory will definitely impace the recovery of the housing market in the next several year. Let's hope that the Shadow Inventory continues to decline.

Shadow Inventory Declines, But Supply Still High
As of January 2011, the number of residential properties in shadow inventory fell to 1.8 million residential properties, representing a nine months’ supply, down from 2.0 million units from a year ago, also a nine months’ supply, according to CoreLogic. Of the current shadow inventory supply, 870,000 homes are seriously delinquent and 470,000 are bank-owned. Accelerated loan modifications and short sales can help reduce the inventory of distressed properties, say economists at CoreLogic.

In addition to the current shadow inventory, nearly 2 million current negative-equity loans are more than 50 percent “upside down” and will likely become shadow supply in the future. New Jersey, Illinois and Maryland have the highest levels of shadow inventory while North Dakota, Alaska and Wyoming had the lowest.

Council of Residential Specialists  Fri, Apr 1, 2011