Will Lack of Inventory Cause Home Prices to Rise?

So have we hit bottom? Are we rebounding?

Buyers are growing frustrated with the growing lack of inventory.  They have been pre-approved for a great loan with a low rate yet they cannot get an offer accepted.  A fixer-upper-corner-lot-property on a busy street in La Mirada received 24 offers in 3 days, my clients' offer was the 24th, by day 10 over 50 offers had been submitted. This is not an exaggeration, rather an all too common snap shot of our current real estate market (Summer of 2012). What is causing this lack of inventory? We all see the vacant homes with weeds at knee height and plenty of NODs, (Notice of Default) so why aren't those houses for sale? Some seasoned  real estate agents allege the banks (The Fed) are purposely staggering the inventory to create an overpowering demand to drive prices higher.  Further driving buyers to buy now, are historically low interest rates.  So what are buyers to do with no inventory and ultra low interest rates?  Some buyers have decided to wait, they are frustrated--most of them have offered above asking price with no concessions just to be overbid.  Successful  buyers, now homeowners, are excited to be in a home with plenty of time to enjoy the last days of summer with their kids.

What about Sellers? Homeowners with very little equity are not selling unless they must.  We are also seeing another small wave of short sales approaching but it will be nothing like the years before.  The banks have gotten all their ducks in a row (sort of) and the long 6 months to a year wait to receive approval or rejection on loan modifications or short sales are pretty much over, unless some one dropped the ball along the way.  What about the home owners with equity? We are seeing more and more sellers slowly entering the market, testing the waters--they want a Sneakpeak!  They want to preview how much can possibly profit and what can they purchase. While some families are up-sizing or moving in together, others are downsizing.  Many empty nesters are finding that they do not need all the extra rooms, their kids have their own homes so might as well sell their original 1960s home and buy a smaller upgraded home with modern day amenities and still have funds to travel and set some aside for the grand kids. The only problem is that some sellers can be rather greedy but in this market (Summer of 2012) desperate buyers are willing to pay.

So it appears we are on an upward trajectory but will it last?  Have we hit "true" bottom? The real estate market IS cyclical--so is this a mere phase? I would love to hear all vantage points.  After all we are all in this together!