The first-quarter drop was nearly 21 percent, bringing down the inventory supply to 4.7 months (the number of months needed to sell all available homes, based on the sales rate over the past year). Actually, supplies are way down in some of the metro areas that have been hardest hit by the real estate collapse: Phoenix (2.4 months), Miami (4.1), San Diego (4.2), Las Vegas (5.2). The market of buyers and sellers is usually considered balanced at six months. One likely explanation is that given the still-declining prices, not enough homeowners are willing to put their properties on the market. That means too few homes and too many buyers. From the WSJ:
[Aarthi Srinivasan] says she fears that prices are being bid up too quickly. She says she had her "aha moment" earlier this year while touring a 50-year-old house that needed extensive remodeling. The home, listed at $1.1 million, received nearly 10 offers and eventually went under contract for more than $1.3 million to a buyer who hadn't even viewed the property. "There are only so many buyers who are going to be in such a hurry, so we're hoping it'll top off soon," she says. On Monday, they offered to pay more than the $1.2 million list price for a four-bedroom, bank-owned foreclosure. They haven't found out if they made the top bid. On the other side of those transactions are sellers like Debbie and Bill Wetherell, who had 17 offers in four days for their four-bedroom home in Danville, Calif. "I was floored. It was so fast, it was surreal," says Ms. Wetherell. The home sold on Wednesday for $796,000, more than $50,000 above the asking price.
LOS ANGELES HOUSING INVENTORY