http://www.zerohedge.com/article/rosenberg-ongoing-case-shiller-fallacy

Indeed, the “shadow’” inventory that does not show up in the official data is closer to 7 million housing units (equivalent to two years of supply!) when you add up all the current foreclosures, the homes entering into the foreclosure process and the number of mortgage borrowers who have not made a payment in the past year.

Let’s examine the data (courtesy of the WSJ):

The “shadow’” housing inventory in the U.S. is closer to 7 million units (equivalent to two years of supply!)
As of July, there were 1.2 million loans that had just entered the foreclosure process.
There are an additional 1.5 million existing units making their way through the foreclosure process.
And, a further 217,000 homes in which the borrower has not made a mortgage payment in the past year, but the lender has yet to file notice. In other words, 17% of the homes that are a year past due or more are not yet in foreclosure, up from 8% a year ago.