Standard and Poors estimates that this is the principle balance of residential properties in foreclosure but not yet on the market. They categorize the shadow inventory as containing loans at least 90-days delinquent or somewhere in the foreclosure process, and properties taken into REO.
At the current pace of home sales, they predict it would take 49 months to clear this inventory.It should be noted that this is a national average and definitely needs to be adjusted for local markets. For example, they claim that, given the current rates in the Phonix market, we only have 30 months of this inventory and that this would be a sign that the worst is over.
That may be true, but in Maricopa Arizona we have actually seen values rise in the past few months due to strong seasonal buying activity and lack of inventory. If, in fact, a release of this shadow inventory begins any time soon, I forecast that values will dip again (the so called double dip).
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