Username, you have asked the million dollar question. There is no clear definition of the shadow inventory, which might partly explain why it has been labeled a myth. I think your best bet would be to research current listings, and go back over several years. Estimates of the shadow inventory are wildly different …anything from 3-10 million, and it really will depend on what you include in that number. I like to think of it as any home that would ordinarily be on the market, but is not due to the housing bubble and the ensuing economic downturn. If you just include those homes which lenders are said to be hording, you are on a hiding to nothing. While their number may be large, the important thing is how many appear as listings at any given moment. Any home that has received a Notice of Default can potentially add to the number, and you can check that at http://www.foreclosureradar.com/ However, how many sellers have decided to forestall putting their homes on the market is unknown. One thing that is certain, is that inventory levels are low which a source of frustration for everyone. Some argue this will affect prices upwardly, but I think that is wishful thinking on behalf of the industry. Just as likely, is a flat to declining market due to buyers disgruntled with lack of quality homes to choose from.
