I actually think there is a lot of shadow inventory but in a different way. Around my area in Los Angeles there is extremely limited inventory, yet I keep seeing houses come up for rent. I feel like everyone got the memo on “low inventory equals higher prices”, and thus people are on the margin hanging onto properties and renting them out instead of selling them in hopes of even bigger gains over time…Softer rental prices or much higher interest rates probably would change things but both of those seem to be happening very slowly so far.
