I read a piece in Seeking Alpha this weekend about the inventory situation in the real estate market.  The author's theory is that the improvement we've seen in inventory levels in the last few months is an illusion. And, he gives formulas for computing what the current inventory really is.

His thinking is that the people who pulled their homes off the market, really still do want to sell. In addition, there are many people who have not put their homes up for sale, but would like to sell. His conclusion is that prices will continue to fall for much longer than most people are anticipating because of the huge amount of unseen inventory.

He makes some good points. Certainly there is some unseen inventory out there. There are a substantial number of people just waiting for the market to "turn around" and then they'll list their homes for sale.

But I think he overestimates the size of that universe. Some of the people who have decided not to see in this market will give up the idea all together. Some of them didn't have a pressing reason to sell in the first place. They'll make improvements to the home they are in and stay another five years.

Some people wanted to sell their homes because they had attractive job offers elsewhere. But, in light of the current market, they passed up those job offers.

There's a growing number of owners who have rented out their homes rather than sell them and take a big loss.  Some of those owners will decide they like being landlords and will hold onto that asset. Others will at least hold onto the house as long as they've got good tenants and they can continue to pay their mortgage.

As with so many things, none of us know what the real inventory number is. But the blog post did get it right that the number is higher than what you'll see in October's report due out this week.