Shadow inventory is supposed to be a Big Problem going forward. Heck, it was supposed to have been a Big Problem already… it just never turned out that way. (I, too, had bought into the concern — and was happy to see it was unfounded.)

Here’s one reason that may have been the case. “Shadow inventory” is loosely defined as ‘homes in or near foreclosure that haven’t made it into the MLS yet.’ For whatever reason, lenders haven’t gotten around to trying to sell them, but they’re out there, waiting to throw the market into disarray.

According to Doctor Housing Bubble (an excellent site covering, well, the housing bubble), LPS says there are about 5.2 million homes in the nation’s shadow inventory:

  • 1,957,000 late 30 days or more, but less than 90 days
  • 1,543,000 90 or more days late, but not in foreclosure
  • 1,800,000 in foreclosure process

(That’s real data — or at least close to it — meaning it’s not a guess, estimate, projection, etc.)

One problem right off is that first number. Close to two million homes (38 percent) are considered “shadow inventory” for being a mere 30 days late. That’s a bit extreme, doncha think? Sorry, LPS, but one missed payment does not a shadow house make.

So the real number is closer to 3.3 million — foreclosures and 90+ days late.

Now, JP Morgan uses different math or numbers or something, and it says that U.S. shadow inventory is about 4.3 million. Whatever. More importantly, unlike LPS, JP Morgan also looks at what becomes of those homes. And it projects that 530,000 of them will get a mortgage mod and thus be crossed off the list. (That’s 12.3 percent, btw.)

So from reading a single blog post about shadow inventory, I found a reason to cross more than half off the list (38 percent for being premature, 12.3 percent for being modified).

That doesn’t mean that every time you read a shadow inventory number that you should cut it in half. What it does mean is that there are good reasons to suspect that the real figures are somewhat or much less than what’s being bandied about.

Shadow inventory was supposed to be a big deal in 2012. It wasn’t. Now it’s supposed to be a big deal in 2013. Maybe it will. But my feeling is that, while there are certainly more distressed homes coming into the pipeline, it’s not nearly as big an issue as it’s being made to be.