Only the Shadow (inventory) Knows

Its less complex than it sounds. Its stuff that the owner wants to sell that isn't formally listed.
It can be...

Private owners who didn't call the broker yet because they are "waiting" until better news.
Private owners or brokers who pulled the listing for a few months to look less desperate
Developers who are only listing 10 of their 100 condos in a project so they folks don't see they haven't been able to sell.
etc.

Zillow reported from a national survey that 2/3 of owners would sell if prices rose. This is why housing busts take so long to recover. You can't dump houses like stocks...

I thought this had something to do with the shadow cast by my big john... at 6 p.m. the shadow can be seen clearly across the east river.... right into LIC....

beware evil doers...where ever you are

There is all this talk about a shadow inventory. Developers are holding product off the market for what purpose? If it's new construction I would expect the apartments to be empty and available. Who benifits?

Because when the developer lists that new building with only 12 units available, it seems a whole lot more in demand than if they listed 100 available units.

It's a new building!
Whose being fooled?
Do developers have such pockets that deep that they can afford to sit on inventory?
How about, we just bilt it, all unit available, this some how ruins it?

It's a marketing thing... less available units theoretically motivates buyers to buy now (or be priced out forever!) whereas seeing they have hundreds of units to choose from, they can take their sweet time.

They aren't really sitting on inventory - I bet if you wanted to buy one of those units, they would let you - and then they can list it at the price you paid and warn all the other potential buyers that "Unit X sold within 10 days of listing and only sold for 2% under listing"

Contrarily, if the units listed now are selling at a discount, you will often see the new listings priced higher, so people can think they are winning with their lowball offers and really only getting 5% off the target price.

Should it make a difference? Probably not, but most buyers don't approach a home purchase from a 100% logical/mathematical perspective. It's your home, you want to have some sort of attachment to it, but then it is easier to be manipulated, and some brokers use that as a bargaining tactic. Limited inventory is akin to "Mortgage rates will be 20% next year!" and "Another couple just put an offer in this morning, so hurry"

Yeah, its not really sitting on inventory, its the car dealer saying "I only have this one left" so you buy it, no matter that there are 20 more at the other lot.