We recently surveyed many of the real estate developments around the bay to ascertain what inventory they currently have on the market and how it compares to year’s past. The graph below shows inventory levels since 2007. In 2007 it was substantially above the other months as a number of projects came online (more than 50). Also at this time, units were selling so quickly that we included total inventory for the developments and didn’t take into consideration if they were releasing in phases or not. In 2008 we did take this into consideration, which brought the number down to just over 4,000 units. It dropped further in 2009 and 2010, from sales (although not a lot), projects canceling or being put on hold.
Although developers now have less inventory on the market, they do plan to release these future phases when the market demands it. When we add up how much there is of this “shadow” inventory on the sidelines, it totals 2,500 units, nearly equal to the inventory that is currently on the market, or doubling it. Fortunately, since its on the sidelines it doesn’t effect the market at this time, but it sure should make developers who may be thinking of developing something at this time, to think twice, or at least take at look at what this shadow inventory consists of, so they are not building something that some other developer already has future plans for.