There has been discussion about and much ado about shadow inventory for the past four years.

But, what’s wrong with looking at housing in terms of fundamentals: price/income ratios, price to rent, payment-to-rent. Also traditional inventory-based methods seem to be reasonably good indicators as well (months inventory).

To me the issue of Shadow inventory falls in the same category as other unknowns (a war or attack on Iran, terrorist attacks on US soil, hyperinflation, US bond defaults, gas prices, the Chargers firing Norv).

You can worry about these things, but there’s no real way to measure the likelihood of them happening.

Take the persistent threat of terrorism since 9/11. Yeah, it could happen and impact you personally, but I wouldn’t plan too much of my life around the next likely terrorist attack on US soil. As history shows, a decade of your life can go by …

If you completely ignore shadow inventory and simply look at prices, inventory and fundamentals I think you are better off.