Schizo I know it is frustrating sitting on the fence as you are… (or were if you have already pulled the trigger)
Indeed I do hold inventory as one of the strongest indicators as to my gauge of the market. Yet you cannot gauge the health of the market on that standalone component. You have to also consider active/pending ratios, foreclosure rates, aggregated inventory compared to the sales rates etc…
There are plenty of explanations as to why the inventory is where it is at.. For one, many resellers have punted on the idea of selling. Those with equity and time are simply going to sit the market out. Those who were planning on relocating have replanned. Many have pulled homes off the market and are going to rent the home out. Not everyone has to sell. Many who attempted to sell in 07 with hopes of a turnaround in 08 are now facing reality and dealing with it.
Now yes it is somewhat amusing sometimes to read posters prognosticating 30k inventory levels and such. However we all need to get some amusement now and then. The more I think about it, the more I become concerned of a long drawn out cycle of downwardness so to speak. Without something more catastrophic like interest rate spikes or unemployment I think we will slowly toil our way down and stay flat.
Another wildcard are the ALT A and A paper resets in 2010 and beyond. That will become an interesting situation.
Anyways, your post is the reason I posted my first 20 days of April posting. Personally I think the posting about inflation as a risk factor is something that is important to think about. Not necessarly the inventory being flat or even negative on a yoy basis. In fact I do not believe 07 inventory reached 06 inventory for that matter.
