According to Standard & Poor's Ratings Services the volume of distressed homes continues to decline. However, the pace at which the inventory is being processed through the foreclosure process is slowing down. The shadow inventory is defined "outstanding properties whose borrowers are (or recently were) 90 days or more delinquent on their mortgage payments, properties currently or recently in foreclosure, or properties that are real estate owned (REO)."
At the end of fourth-quarter 2010, S&P estimated it will take 49 months, or more than four years, to clear the supply of distressed homes on the market in the U.S. as a whole. This is an 11 percent increase over the previous quarter and a 40 percent increase from fourth quarter 2009 for the average time to clear these properties in the U.S.
According to S&P, Los Angeles area has the largest inventory, but New York will take the longest to clear.
Lots more information and pretty graphs in the original article.
Fourth-Quarter Shadow Inventory Update: Drop In Liquidations, Stable Cure Rates Indicate Increased Foreclosure Timelines
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