Portland Area Real Estate Inventory Is Down. Will This Strengthen Or Weaken The Industry?

Portland Area Real Estate Inventory Is Down. Will This Strengthen Or Weaken The Industry?

In the March 1st issue of The Oregonian, it was reported that real estate inventory in and around Portland is down as new listings dropped 25% in 2011, even as sales rose 4%. As a general rule of economics, this should indicate that supply and demand have aligned, prices will stablize and the market strengthen.

But it doesn't feel like that's what's happening. Rather it seems to indicate that sellers aren't confident in the value of their homes and thus are sitting on their real estate, waiting for the market to improve, unless, of course, they have to sell. Likewise, buyers are limited in their choices so are taking longer to find the home they want and end up waiting to make that big move into home ownership. Neither of these are good for the industry.

In the good news department, The Oregonian pointed out that many buyers are purchasing new homes, a move they wouldn't have considered before the housing crisis, simply because there are more choices.

The paper went so far as to call this a "builder's market", which can be good news as jobs are created and more money is put into the local economy. As I mentioned, sales are up 4% and any increase is a positive indicator.

I wonder if local real estate agents agree with me that the current situation has put the industry in a bit of a stalemate. As buyers and sellers wait to see what the market is going to do, no one does anything and the stalemate continues. It's a vicious cycle.

I am generalizing, of course, as there will always be people buying and selling, but I contend they are not doing so in nearly the numbers the improving economy could and should be warranting. I've felt we've been on the verge of a recovery and maybe even an upswing for a while now, but we seem to remain merely "on the verge".

So what do we do to change this? Is this happening in your area and what does this indicate to you? Is it a public perception of the industry problem or is something more fundamental at fault?