The Christian Science Monitor discusses the largest down-side risk to metro Phoenix residential home prices, the large overhang of homes in the foreclosure process in Phoenix.

The question everyone wants to know is, “What do the banks plan to do with those homes?”.

But, despite the short sales, foreclosure sales, and the burgeoning rental inventory, there’s also a massive ” shadow market” of empty or rented homes yet to come on the block, as banks try to optimize returns on failed investments and homeowners hold off, waiting for a rebound.

” Taking a house in foreclosure but not putting it out on the market, that’s common right now,” says Rajeev Dhawan, a real-estate economist at Georgia State University in Atlanta. ” Short term, it’s good, but long term you’ve got a problem. When the market starts to recover, they’re going to dump the inventory,” pushing prices down again.

The positive sales numbers and the slowing price slide ““ mirroring trends in California and Florida, two other housing-crash epicenters ““ is a sign that the real estate market may finally be shoring up, said Arizona State University real estate professor Karl Guntermann in a recent report.

” It appears that we’re turning,” said Professor Guntermann.