The current real estate market in the Plateau area can be summed up in one word: inventory.

If we want to expand that to three words, it would be: lack of inventory. As high-tech as real estate has become, with continual Internet access to every listing on the market, smart phone apps and GPS systems, it’s an age-old concept that continues to win the day: supply and demand.

When the real estate market saw declining prices starting in late 2007, inventory was plentiful, but buyers were scarce. That condition remained essentially unchanged as the prices declined right up until the midway point of 2012. In June of 2012, fewer houses were on the market and more buyers were appearing. By the fall of last year, there were reports of a shortage of inventory and bidding wars for homes in Seattle and Bellevue. Historically, what happens in the real estate market in Seattle eventually makes its way to the Plateau, and that happened again this spring.

Here’s an example of what I’m talking about. As of this writing, there are 53 homes actively being marketed in the Northwest Multiple Listing Service. Currently, there are 54 homes that are “pending sales”, which means that a homeowner has accepted an offer but hasn’t closed on the sale yet. In a normal market (if there is such a thing anymore) the active homes would outnumber the pending homes by a ratio of three or four to one. Instead, there are actually slightly more homes waiting to close than are being actively marketed. This, of course, creates a strong seller’s market.

In a seller’s market (generally any time there are less than three months’ worth of inventory available for sale) buyers often end up competing for a home with other qualified buyers, which usually ends up driving the prices of homes up. If you are a homeowner who saw their equity disappear over the last five years, that is good news. However, the recovery of prices in our area will be a long, slow process. One year of good activity will not wipe out five years of declining prices.