Supply and demand in the housing market remain seriously out of whack. The Commerce Department reports housing vacancies remain near record levels. And a staggering 21% of housing units built since 2000 sit empty. That’s a whole lot of cheap drywall and expensive countertops.

But it’s likely to be only half the story. “People focusing on the Multiple Listing Service (MLS) data for an accurate picture of the current housing market are missing the bigger picture,” writes the inimitable Dr. Housing Bubble. “This is like looking at Mercury and thinking you have a full picture of our solar system. This is the data that most in the public will be able to see without digging deeper into foreclosure and pre-foreclosure data, and this is what is now widely known as the shadow inventory.”

In short, banks have been holding back on the shadow inventory, thus artificially lowering the supply of homes on the market.

Using Los Angeles as an example, a quick scan shows 6,901 homes for sale. Which seems like a small amount of inventory for a big area. But when you look at the shadow market — those homes that are distressed, bank owned or scheduled for auction — it’s twice as big as the regular market.

In Los Angeles, an additional 6,583 notice of defaults have been filed, 4,264 home auctions are scheduled and 3,376 are now real estate owned.

“You can listen to the same dubious folks that missed the biggest collapse since the Great Depression,” the doctor says, “or you can spend a few minutes looking at the data above and putting 2 and 2 together.” The path ahead is not good for housing values.