Officially, there are 3.5 million homes for sale nationwide. But there are millions more lurking in the shadows -- hidden neatly away on banks' balance sheets, stalled in foreclosure court proceedings, or simply occupied by nonpaying owners as lenders wait months or years before taking action.
The housing market's ballooning shadow inventory -- buoyed by a yearlong foreclosure slowdown -- stands as its most menacing problem, threatening to stifle recovery for several years.
Economists insist that the housing industry will not normalize and recover until most of the foreclosures work their way through the system -- a process that will likely last several more years.
Shadow inventory can be broken into three categories:
• Properties lenders have repossessed, but have not put up for sale. These homes are referred to as real-estate owned, or REOs.
• Properties caught up in the clogged foreclosure process.
• Properties that are severely delinquent in loan payments -- almost certainly headed for foreclosure -- but have not yet entered the process.
And the number of homes.
Calculating the size of the shadow market has proven difficult, and estimates range from 1.6 million to seven million homesRead it all