What is shadow inventory?  Shadow inventory is real estate properties that are either in foreclosure and have not yet been sold or homes that sellers are holding back on selling until the market improves.  If all the shadow inventory were released at once the market would be flooded with homes and drive the market way down.  According to Standard and Poor’s, it will take about 46 months to clear the current shadow inventory.  Once the majority of these homes have been released the market can really begin to stabilize.  Shadow inventory is always coming onto the market but for the first time since 2007, the rate has slowed in the first quarter of 2012.