In some metropolitan areas, particularly Atlanta, REOs are concentrated in exurban and suburban stretches.

FORBES: City Governments and the Great Housing Beyond

Short sales are not the only way that potential REOs are being diverted.

FORBES: Expected Foreclosure Wave Weakened by Short Sale Rip Current

Indeed Clear Capital has tracked a direct correlation between REO saturation and market prices: when REOs spike, prices drop.

FORBES: Is A Double-Dip Housing Market Old News?

Through October there have been a total of 559, 063 REOs nationwide, on pace for about 650, 000 for the year.

FORBES: Expected Foreclosure Wave Weakened by Short Sale Rip Current

In 2005 and 2006 there were less than 270, 000 REOs per year.

FORBES: Expected Foreclosure Wave Weakened by Short Sale Rip Current

And lenders are finally instituting better foreclosure-prevention policies like loan modifications and short sales that keep homes from hitting their books as REOs.

FORBES: The Foreclosure Crisis Isn't Over Just Yet

The analysis, compiled by CoreLogic deputy chief economist Sam Khater, looked at 16 major U.S. housing markets where bank-owned inventory (REOs) have been relatively high since the housing bubble burst.

FORBES: Wall Street Institutions Behind Home Price Surges In Markets Like Phoenix