[quote=analyst]The phrase “shadow inventory” came into existence to describe quantities of properties which were expected to appear as listings for sale, but, for some reason, did not.

In that context, there is no difference between any of the following:
1. REO not listed for sale
2. NOT, sale postponed, no short sale in progress
3. NOD, NOT not issued, no short sale in progress
4. delinquent, NOD not issued, no short sale in progress
[/quote]

Inventory numbers by themselves are meaningless. One needs to also consider the demand side.

For example, if the inventory is 10,000 homes and 15,000 sell in a year that is one thing. If 500 sell in a year it’s a completely different story.

So, in that spirit we should start tracking shadow demand. These would be those who will buy in the future but are not current buyers in the market. Current (real buyers) are known from the sales numbers. Shadow buyers would include the following:

1. Those making offers but not getting the house due to competition.
2. Those trolling around realty web sites, saving up down payments for a purchase 12-18 months from now. (these buyers will be ready to purchase about the time those properties in shadow category #2 and 3 come to market).
3. Bubble-sitters.
4. Those aged 26-35 (well, those that still have jobs) who were shut out of housing due to the high prices of the last 5-10 years.
5. Seniors in high school. Some of these kids will eventually go to college, knock someone up and need a place to live in 5-15 years.

Anyone know of good reliable sources to find the number of these buyers ?

Measuring future inventory without considering future demand is a fool’s game. Neither is predictable.