You probably remember this Looney Tunes scene:

Wile E Coyote is in hot pursuit of the Roadrunner. They approach a cliff. Roadrunner screeches to a halt, but Coyote keeps running blindly and for a moment hangs in suspension before his imminent drop,

The East Bay real estate market is having such a moment.

Inventory in the East Bay has been rising month over month this year, reaching a high point in the month of June. Along with that, the number of homes sold also increased month over month.

This all changed in June. The number of homes sold in July (they went pending in June) dropped 22% from the previous month. What that means is that as inventory rose, the number of homes that sold decreased.

Let me say that again. The number of homes that sold decreased not because there was less inventory but because fewer homes went into contract. Days on market rose to 19 days in July.

Buyers seemed to have stopped at the edge of the cliff like Roadrunner. Wile E Coyote sellers just kept going. They are now running with no ground beneath their feet. They do not seem to have realized that. At least not yet.

Sellers are holding out for higher prices. Homes are getting offers, but if the buyers aren’t meeting sellers’ expectations, sellers are just saying “I can wait.”

Sellers’ willingness to wait for their price is masking how much the housing market has actually declined. When the Fall market picks up and buyers return, will they be willing to pay the prices that sellers are holding out for?

Maybe. For the right house. If not, some sellers will pull their homes off the market and others will be forced to accept the lower prices.

It’s a face-off. One side has got to give.