Drop in Inventory – Another Factor

With the end of the second quarter, we are now a couple of weeks away from the press talking about how inventory levels are down.  This will be substantiated by reports from the San Diego MLS or SANDICOR that inventory of available homes fell from about 15,900 at the end of March to about 9,400 at the end of June (these numbers are approximate as I do not track manufactured house or time shares).   Now, this looks like a huge drop and would signal that there is not enough inventory to meet demand, prices are going to shoot up, etc. (see the post below for a discussion on the dual markets we are seeing and the reasons for them).  The problem is, these numbers are not accurate.
In April, the SANDICOR added a new listing category called “Contingent”.  This is supposed to be used for homes that are short sales where the seller has accepted the offer and it has been sent to the bank, and Bank Owned Homes where the offer has been submitted to the bank but there has not been formal acceptance.  These homes are homes that previously were left in the “Active” state.  The new classification is important because it paints a more realistic picture of the homes that are currenty available.  The problem is, there is no way to go back to March and determine how many of the “Active” homes would be “Contingent” today.  What we do know is that there are over 3,800 “Contingent” homes in the MLS right now.  If you add that number to the Active listings, you get a result over 13,200.  While this is still a 17% drop in inventory, it is not the 41% that it looks like on the surface.