How 'Shadow Inventory' Hurts the Housing Market

While it’s bad for broad recovery, inventory is great for buyers.

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A buyer's market. While the shadow inventory is bad for the broader housing market, it's an advantage for buyers. As long as there are foreclosed homes on the market, prices will be depressed. According to NAR's Molony, these low prices will help to clear out homes stuck in the shadows.

"Foreclosures are selling quickly because they are heavily discounted," he says. "Investors and first-time buyers are competing for lower-priced homes in most of the country, with frequent reports of multiple bidding in the low price ranges."