I half agree. Yes, it's speculation absent access to banks' actual balance sheets. But we do know that a good many such homes are in foreclosure due to official filings, and that a high proportion of those have yet to be brought back to market, plus we can speculate that banks are generally sticking to their policy of not forgiving debt - although they may recover less than the outstanding loan value by selling the house, they don't want to set a precedent of wiping out (say) 25% of the debt on mortgages by mutual agreement, because then everybody will try to take advantage of it, even those who are not yet underwater.
Anecdotally, I've been househunting for a few months, and just in the last few weeks I've started getting calls from real estate agents to inform me that the asking price for property X or Y has dropped, and would I care to make an offer? I find this startling - I'm looking around the low end of the market (by San Francisco standards...it's still expensive here) and only a few months ago the typical attitude was 'at this price, everything goes fast - better increase your bid a little if you really want it'. Now I'm getting called at least once a week about 3-5% price cuts.
Some of this is doubtless due to the public perception that the first-time homebuyer's tax credit was expiring in November (in fact it was extended to April). But the ratio of new properties on sale to foreclosures has been < 1 for a while now. I think the increasing pain of the commercial real estate market is creating a glut of inventory for banks, which they are increasingly anxious to get off their books.
Specifically, # Sold, # For Sale. If I'm reading this right, seems the market peaked in mid-December, has dropped 25% in the past 1.5 months and now inventory is coming back up.
The thing about the shadow inventory is ... it's houses that have trashed and had their wiring stripped by meth-heads. Yes, even our drug-addled friends can do their part to support the market. It might be a terrible waste of resources but letting unsold housing just die on the vine is another thing that may, just may, keep the expansion going another year or two...
Keep in mind that Zero Hedge is a very controversial finance blog, and the writer has a dubious past.