Back in the 1930s there was a radio adventure show which has since largely faded from pop consciousness – except for its killer tagline: “What evil lurks in the hearts of men? Only The Shadow knows.”

Substitute “housing inventory” for “hearts of men” and you’ve just about got a perfect description of the state of the real estate market in 2012.

Shadow inventory is that which is headed for sale but has yet to be officially put on the market. On that much, everyone agrees.

But after that, it gets a little sticky – while some economists define shadow inventory quite narrowly (houses already in the foreclosure process and REO properties not yet on the market), others regard it much more broadly.

Various definitions include unsold listings taken off the market for the winter, any homes for which the owners are more than 90 days behind on their mortgage and/or all the folks who’d like to sell but can’t because they’re underwater or scared to dip a toe in the market.

A Banker & Tradesman investigation into each of these components in turn reveals not a single shadow, but a checkerboard of light and dark, with some possible signs of hope – and some huge unknowns.

Holding Back

For example, take the first component of the shadow inventory, un-marketed REO. There isn’t any. When the foreclosure crisis first began, many feared banks would flood the market with foreclosed homes. When that didn’t happen, the worry shifted to the idea that banks might be holding homes on their books, allowing them to get run down and depreciate, to avoid losses.

But Banker and Tradesman found the vast majority of foreclosed property generally hits the market immediately. And it’s selling quickly: Over the past eighteen months, the pace of REO sales has more than doubled.

A Massachusetts home foreclosed upon in May of 2009 took an average of 238 days to sell to a third-party buyer. By June of 2011, foreclosed homes were selling in an average of 91days – down from nearly eight months to just over three. By contrast, the average, non-distressed home sold in June spent 103 days on market, according to statistics from the Massachusetts Association of Realtors.

It’s not clear what’s driving the trend, said Barry Bluestone, a professor of economics at Northeastern University in Boston.

“My first guess is that speculators are figuring we are near the bottom of the market in Greater Boston and that this is a good time to snap up properties in order to get them ready for resale,” he said. “As such, it may be a leading indicator of a somewhat stronger housing market in the months to come. But this is just a guess.”

At the same time as existing REO is moving swiftly through bank’s hands, the pipeline has also shrunk – foreclosures have plummeted, dropping more than 30 percent from 2010 to 2011, according to The Warren Group, publisher of Banker & Tradesman. One might think that would represent unmitigated good news – but it’s unclear how much of the decline is being driven by bank’s liability worries, particularly in Massachusetts, where the Ibanez and Bevilacqua cases (and possibly the yet-to-be-decided Eaton case) have already clouded title on thousands of properties.

“My investors are holding back at the moment,” while the legal situation works itself out – and awaiting a potential flood of shadow inventory when it does – said MaryBeth Muldowney, broker/owner of Trade Winds Realty Group in Norwell.

But it’s unclear how long they’ll have to wait.

‘Housing Death Spiral’

While foreclosures are down and current REO is getting snapped up, the more nebulous components of shadow inventory – troubled loans likely to default and homeowners who might wish to sell but can’t – are still substantial forces in the marketplace.

In Massachusetts, about 8.1 percent of homeowners were behind in their payments in the third quarter of 2011, according to the most recent National Delinquency Survey, conducted by the Mortgage Bankers Association. That’s a 1.5 percent drop from the peak delinquency rate in 2009 – but worryingly, after falling throughout 2010, the delinquency rate began ticking up in the second half of 2011.

More troubling, of the 8.1 percent of local homeowners behind on their mortgage, 3.8 percent are 90 or more days behind. Noted housing analyst Laurie Goodman of Amherst Securities testified before Congress last fall that 80 to 90 percent of such homeowners are likely to default and eventually be foreclosed on. With just over 1 million mortgages outstanding in Massachusetts, if Goodman’s predictions hold true, that could mean another potential 40,000 foreclosures over the next several years, dragging down the housing market for years to come.

And with more foreclosures on the horizon, the willingness of sellers to enter the market may be the most important factor in whether the market experiences a real recovery. Because while agents and brokers say they’re seeing increased demand, inventory, especially at mid-tier price points, is slim.

“My office just brought to market one single-family home and one condo that each attracted over 70 people to the first open houses last weekend,” said Greg Kiely, manager of Century 21 Commonwealth in Newton. “Neither home is unique or exceptional in any way.”

Bill Kuhlman, broker/owner of Kuhlman Residential Real Estate in Needham, listed a house in the $300,000-range just before Thanksgiving. With the holidays traditionally the slowest time of year for real estate, he was considerably surprised to find himself with two full price offers in his lap just days before Christmas.

“I would definitely agree with the notion there isn’t much inventory in the lower and middle sectors of the market,” he said.

“Inventory is low,” agreed Muldowney. “Most owners in that [mid-price] range may be upside down presently in the market and unable to move up due to financing versus equity issues.”

If all those buyers out there pounding down the doors of open houses finally pushes sellers into the market, then 2012 may, in turn, finally be the year when the shadow lifts. But, warned Goodman, if foreclosures continue to drag down prices for years to come, the market may enter into a “housing death spiral – as lower housing prices mean more borrowers become underwater…[and] more underwater borrowers means more defaults; more defaults means more inventory, more overhang, and even further declines in home prices.”