National Association of REALTORS® Chief Economist Lawrence Yun points out in a recent article that home price increases over the past two years have reduced the number of underwater homeowners (the value is less than their loan balances) in half but there are still approximately 6 million homes at risk of default. About 2.3 million of these are already seriously delinquent or in foreclosure. But in California the reduction in seriously delinquent mortgages has been dramatically reduced, from a rate of 12.5% at the peak to 3.6% now. Last year, of the 1,210 single family homes that sold in the metropolitan Santa Barbara area, 41 were bank owned foreclosures and 72 were short sales. This would be 3.4% bank owned sales and 6% short sales or a total of about 10% of last years sales where distressed. Currently there are 4 active bank owned single family listings and 3 short sale listings out of 275 available. According to a Realist search of south coast zip codes there are 159 properties of all types that in are pre-foreclosure or noticed for auction. If all those homes had come on market and sold last year they would likely have only been around 10% of the sales. Hardly enough to significantly affect our market. Concerns of shadow inventory in our area are unwarranted and the increase in inventory they might bring is illusory.