A drop in both home prices and construction is causing the housing inventory to diminish. A recent report indicates that the volume of unsold homes on the market in San Bernardino and Riverside counties decreased 33% between February of 2008 and 2009.

first tuesday take:  Missing from this report is the trendline depicting foreclosures and sales volume, and that line is most different from the story told in this report. This report appears to be based on press releases of advisors to builders – suggesting builders should start picking up the building pace next year.  That will not happen, and we are currently at the lowest level of construction since World War II. The trendline, along with an accompanying first tuesday analysis, is available in this article from March, 2009.

Sales volume peaked last September after rising from the lowest sales volume in 50 years during December, 2007 and January, 2008. In contrast, pushing in a different direction from sales, foreclosures dropped by late 2008. The foreclosure drop is attributable solely to congress forcing lenders to stop the foreclosures which they still must eventually process. That foreclosure process is picking up as we write, and will increase in intensity throughout 2009 and into 2010.  California has around 750,000 more foreclosures to go through, a painful process that will not stop until 2013.

Take a look at the trend line, and make your own call on whether we have hit the bottom and builders should get back into boom times.

Re: San Bernardino, Riverside counties home surplus is easing”, from Press Enterprise