Over time, the shadow inventory is becoming more concentrated in states with the slower judicial foreclosure processes and will likely continue to damp house prices in those states. Nonetheless, the specific dynamics going forward will depend on the pace at which these properties are put on the market for sale. Investor activity is difficult to predict.
As house prices rise, some investors may no longer find purchasing homes to be a profitable enterprise. Other investors may want to lock in their gains and sell properties. The prospect of steady rental income and possible further capital gains, though, will likely continue to be attractive to many investors.