Last October The Stockton Area Market Update Newsletter featured Shadow Inventory. Shadow inventory is inventory looming in the background, not included in current homes for sale, but will soon come to light. The shadow inventory includes all loans behind by at least 3 months, those already in foreclosure and many loans that are 1 to 2 months behind. According to Morgan Stanley the total number of homes in this shadow inventory will be about 8 million by the end of this quarter. At the current sales rate, it would take just under 4 years to clear out this inventory causing the housing market to remain slow. Read Shadow Inventory Could Take Four Years to Clear.