They key to spotting a market bottom is by following the home inventory levels of a specific market.  Once the inventory of homes reaches a top and starts to decline that means the buyers are beginning to overtake the sellers, and hence supply and demand are changing.  Here we take a look at the recent historical level of inventory in a few areas of the Santa Clara Valley.

Home inventory levels for Santa Clara have been climbing every year since 2005.  Levels top off in the summer forming a plateau, typical of the real estate cycle we experience here in Santa Clara Valley.  Every subsequent year  the number of unsold homes have carries over increasing the number of homes for sale in Santa Clara.   In 2007 we experienced a large increase of  Inventory.  As the average humber of homes increase, so does the average days on market, and prices begin to drop.