Another factor that deserves mention is that people may just be numb to bad figures. We have been reading the horrible numbers for a year now and the sky has not fallen. Each WEEK we get an unemployment report showing 500,000 jobs lost but it’s been going on so long no one pays attention.

14696 foreclosures in SD alone is cataclysmic, foretelling of impending disaster, yet it’s just another really big, really bad number that just does not get processed by number numb, bad news saturated minds.

Many have just decided that no matter how bad things get… things won’t really get that bad.
How else can 14696 distressed mortgages AND bidding wars exist in the same time frame and location?

As for the short-sale debate; in reality, Short-sales are simply REOs (future/shadow) coming to market. Rather than a sign the shadow inventory does not exist or will never flood the market the short sales ARE a form of the shadow hitting the market. If a bank sends out a NOD on a house then does nothing further for 18 months or even just 2 months, its part of the shadow inventory. After which, if the bank lists it for short sale then it is the definition of shadow inventory coming to market.

The bank lopping off 50% before or after the foreclosure process is 100% complete, matters little does it? When we see the flood, short-sales will of course be part of it.