Hi again, Douglass.
Well, I think that the real estate market in general has been subject to a number of big changes in the past 5 years, and they all have their effects. I think the reasons for current inventory levels are complicated...
The economic downturn meant that nobody was buying. Sellers would not list, as prices were impacted greatly, and buyers would not buy because confidence was low. In this area, those buyers often still had the means, but were 'smarter' about how they utilized their funds.
As things started to look up, many of those buyers started to buy again, driving a resurgence in desirability of Silicon Valley real estate.
Interest rates tumbled, those who didn't have big down-payments could borrow more, and buyers realized that they could purchase at somewhat reduced prices.
Often in a climate like this, sellers will often wait to see if things go up and buyers will want to buy before things go up!
Sellers in a market like this aren't necessarily as aggressive as the buyers for the following reasons:
In my experience, this current trend will last for a while, and then sellers will re-gain confidence as well...meaning that they'll feel better about listing their homes. This is already beginning to happen - I see a lot more inventory now than there was a couple of months ago, for instance.
During the process, sellers tend to rely on what they hear through the media, and won't necessarily contact an agent to discuss market conditions until they've decided to sell.
By contrast, a buyer searches a little more actively, looking online, and generally speaking with a real estate professional earlier in their process.
The media is almost always behind the 8-ball...by a couple of months. Media usually lumps big parts of the US together and call it 'The Market'. 'The Market' hasn't recovered as much in many parts of the country, so the media has only recently started telling us that 'The Market' has improved.
Thinking this through as a homeowner who doesn't really 'need' to move, there is some fairly recent good local news, so it's likely that they're just starting to think about putting their toes back in the real estate waters.
See the cyclical nature of this? The effects are more pronounced at the moment, following a few years of financial upheaval, but it's cyclical, nonetheless.
Another part of that cyclical effect is that interest rates are beginning to increase a little. Just as sellers are starting to put their homes on the market, there is likely to start a new trend of buyers being a little less aggressive, and the whole pendulum will slowly start to swing in the other direction for the next part of the cycle.
Thanks for asking the question - it was fun answering it:)