All of the conversations I have been having with Realtors lately center around a the theme, “I am loving this market, just wish there were more houses to show my clients.”  December gave us the lowest Portland housing inventory we’d seen in years.  Inventory climbed to 4.7 months in January but there were only six more listings on the market at the end of the month compared to December.  Why did inventory climb if the number of houses on the market is the same?  Inventory is a ratio: listings/closing.  For January, listings remained virtually unchanged but closings slowed, pushing inventory closer to market equilibrium.  Traditionally six months has been considered the middle point between a buyer’s and seller’s market  but I would argue that in this “new” recovery market, it is five months or less.  Buyers are more apt to walk away from a transaction than they were in the bubble market.

Equally important is the lower box of the graphic- prices are rising.  Looking at the same report a year ago, the 12 month rolling average was down 6.1% and the median was down 6.9%.  Now it’s up 5.4% and 7.3%, respectively.

It’s entirely possible that we’ll see prices drop a little when REO properties (bank owned) start to work themselves through the judicial foreclosure process.  With the uncertainty of how the Oregon Supreme Court will rule on the legality of MERS transfers (the transferring of deeds without recording), banks have started going down the judicial foreclosure route.  It’s a longer and more expensive process than the non-judicial foreclosures.  Since those properties are typically lower priced than traditional sales that may put downward pressure on prices and they may be somewhat inflated now because there are very few REOs on the market now.