Perhaps we're not really going to run out of houses, but inventory levels are certainly dropping in Harrisonburg and Rockingham County.  Two years ago (in early February 2009) there were 838 homes for sale.  One year ago (in early February 2010) there were 863 homes for sale (yes, an increase).  But when I published my monthly market report a week ago there were only 778 homes for sale. 

Furthermore, that level of 778 homes for sale is a full 23% drop in listing inventory from six months earlier (July 2010). 

Now wait a minute, you might object, certainly there is always a big drop between July's supply of homes and February's supply, right?  Well, perhaps so, but not this significantly of a drop!  If we move the clock back one year earlier, February 2010's supply of 863 homes was only 5% lower than July 2009's supply of 904 homes for sale.

So what could be going on here?  One prevailing theory as I talk to my clients and to other local Realtors is that have been quite a few listings over the past several years that were homeowners that wanted to sell, but didn't have to sell.  Perhaps these sellers have finally given up (at least for now) as they have realized that the market isn't going to experience a dramatic turn around in the near future.

Do you have other theories?  Why are there fewer and fewer homes for sale?  Does it seem to you that inventory levels are dropping?  Are they in your neighborhood?