Shadow inventory are houses available but not listed in the MLS system.

Most often, these are REO (Real Estate Owned, foreclosures and such), and the Sacramento Real Estate Statistics blog has some numbers on a few markets.

City	MLS Listings	Foreclosure Inventory	% of Listings
Sacramento	14,913	31,219	209%
San Francisco	18,647	35,402	190%
Inland Empire	45,490	82,114	181%
San Diego	18,771	31,168	166%
Los Angeles	62,379	88,843	142%

So the massive inventory out there, might account for less than half of all the houses actually on the market.

Time to freak out?