A normal balanced market has about 6 months of inventory. If there are 100 homes sold in a market, there should be about 500 in active inventory. If there is less than this, there will be a lack of supply which will cause large appreciation due to the buyers fighting over homes.
Currently, we are approaching a stable market. Homes appear to stay on the market longer because of the short sales properties that can take 7 months to close. In reality however, these homes have offers rather quickly so the market is not as unstable as it appears. Currently, in the Fremont ca bay area, properties under 500K are receiving multiple offers and the rent value is almost equal to the mortgage payment. view home Prices on line