The amount of shadow inventory has been shrinking significantly over the last two years. Here is a chart showing how the amount of distressed properties (foreclosures and short sales) grew and then fell off over the last several years.
It is also important to realize that certain parts of the country took much longer to bring their distressed properties to market because of the judicial process required of the banks before they could foreclose on a property. These ‘judicial’ states still have some work to do before they are entirely out of the woods.
Here is a map showing the number of months it will take to clear that state’s inventory of distressed properties.