Irvine (and i'm sure many other cities in OC) has the same sharp drop off in inventory, but just to be clear, the decline in inventory is NOT due to large number of properties getting sold. Rather, the potential sellers simply don't want to put their home on the market in the current environment since the comps are no where near what they believe to be the true value of their home, aka "seller's delusion".
The reality is that MLS listings in these area during the past couple of years captured too many properties still priced like it's 2007 ($450+/sq ft). Now, those listings have diminished substantially, and MLS listings today are mostly under $300/sq ft (still way over priced but much closer to reality).
The good news / bad news (depending on which side you are on) is that banks are speeding up their foreclosure process because they need capital to shore up their balance sheet in the coming quarters. So for those who are underwater and plan to squat for 2-3 yrs without paying a dime, good luck... you'll be getting certified mails from the bank soon! Once banks start to unload these properties, inventory will naturally rise.
