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As with every month so far in 2009, more existing San Diego homes went into foreclosure than were sold. Just barely, though — the ratio of home sales to default notices (the initial stage of foreclosure) was just gnat’s eyelash below one-to-one. The ratio was .997, to be exact. That’s the best sales-per-default ratio all year.

But it’s still terrible. The following graph shows that while the sales-per-default ratio is above the lows set earlier in this downturn, it’s still well lower than it was at any time during the two decades or so that preceded the current housing crash.

Here is a look at the same data series using a twelve-month average to smooth out seasonal variations. This gives a better big-picture idea of what’s going on. And what’s going on is that while the twelve-month average sales-per-default ratio has been moving upward since late 2008, it’s still quite low compared to times past.

Here’s a closeup of the twelve-month sales-per-default ratio during the current bust alongside the same figure for the early-1990s housing downturn. The ratio is still less than half of what it was this far into the prior bust.

While sales volume may be healthy, shadow inventory continues to mount.

What’s still unclear is when — or even if — the bulk of this inventory will come out of the shadows. The rumors and speculations are all over the map: that the foreclosures are about to be dumped onto the market en masse, that they will never hit the market at all, and everything in between. The entire topic is quite murky, at least to me. But the concept of shadow inventory remains very much on the radar screen, and it will continue to do so until the numbers being tracked in the above charts approach normalcy once again.

— RICH TOSCANO

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