Some of my thoughts – the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn’t even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of “must-sell” inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole – add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). “Must-sell” inventory, by it’s very nature is not seasonal – no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this “must-sell” inventory I would think would have the effect of keeping a lot of houses which don’t have to be sold off the market – I suspect a LOT of potential sellers who aren’t in a “must-sell” position are keeping their properties off the market because they don’t want to compete with the “must-sell” inventory. This inventory I would think would normally make up the large part of the seasonal variation – people who don’t have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn’t sell at the price they’d like to see. This is “phantom inventory” as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven’t been able to keep up with the incredible foreclosure rate, meaning there’s still a ton of stuff in the wings just waiting to be processed.