It would seem that San Diego’s housing inventory flood has finally begun to recede. According to my spot checks at (an incredibly useful site, I would add), the number of condos or single-family homes for sale peaked in August at right around 21,000 before starting to head down.

This is interesting because in both of the prior years, as the accompanying graph indicates, inventory growth didn’t turn around until October. Why the early peak in 2006?

It’s not that more units are selling. Sales volume continues to shamble along at 20 to 30 percent below last year’s levels. So it would seem that fewer people are listing their homes for sale – and that more would-be sellers are removing their homes from the market.

I think the most likely explanation is that the combination of slow sales and heavy competition has caused people to throw in the towel. Those of us who have been through it know that having a home on the market is fairly high-impact, requiring one to keep one’s living space in museum-quality shape at all times. Rather than enduring this situation into the slow (or in this case, “even slower”) season, many a seller is likely giving up and hoping for a more housing-friendly 2007.

If this theory proves correct, we can expect inventory growth to be fast and furious early next year.


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