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Portland Inventory Slashes to 4.5 Year Low

1-18-2012

Finishing the year off as of December 31, 2011 Portland’s inventory levels hit a 4.5 year low at 5.3 months of remaining inventory.  Inventory finally dipped below the 6.0 month mark.  The last time Portland’s Inventory dipped below 6 months was in July 2007 when it stood at 5.7 months.  Inventory is calculated by taking all the currently active listings on the market at the end of any given month and dividing it by  the number of closed sales in that same month.   These figures are based upon both city of Portland and Portland’s suburbs statistics combined but obviously certain areas of Portland would have higher and lower values depending on where and when the numbers were used.  To see all the major inventory statistics for Portland click here.   This figure indicates that at the current rate of sale it would take approximately 5.3 months to clear off the current homes available for sale at the current rate of sale assuming no new homes hit the market.  It’s really a general barometer of supply.    

Ok so what, so there are fewer homes on the market what does this mean?   With fewer homes on the market you have more buyers competing for the same homes.  Let me give you an example, if you have 50 homes in a particular area for sale and you have 50 buyers wanting to buy in that area you have a fairly balanced market between number of homes and buyers.  When you take 20 homes away and now you have 30 homes available for sale in an area that demands 50 buyers you have buyers competing against each other in order to get their favorite homes.  When buyers compete prices of homes increase and there will be more sales at higher prices.  In this type of market (where overall values have decreased) this can lead to price stabilization and price stabilization can lead to consumer confidence and consumer confidence can lead to a very strong demand and a very strong demand can lead to homes APPRECIATING in value!  The fact that inventory is at a 4.5 year low may be nothing but it could also be the start of a something very big in the Portland real estate economy. Only time will tell.


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