Real Estate

Water, millennials drive Portland, Oregon, housing

It's not jobs. It's not tech, and it's not foreign investors. Portland, Oregon, housing is benefiting from a few things its neighbors don't have: water and home-buying millennials.

"We're on the West Coast and we have water. They're moving here in preparation for lack of water," said Brian Ramsay, a real estate agent with Hasson Company Realtors.

Portland, Oregon
Espiegle | Getty Images

Unlike California and Seattle, he said, the relatively low home prices in Portland, combined with still low mortgage rates, make the area quite affordable for younger buyers. Add water, and suddenly the market is red hot.

Read MoreNew listings not helping Twin Cities' housing rebound

"You're lucky if you can be one of the first 15 offers in 24 hours. That's how hard it is for buyers to get a house now," said Ramsay.

The sales numbers are staggering—signed contracts in April were 28 percent higher than a year ago, the strongest since 2005, according to RMLS, a real estate data firm. Closed sales in April showed an identical leap.

Despite a 9 percent jump in new listings in April from a year ago, Portland has an anemic 1.8- month supply of homes for sale compared with a normal market of six months. The average time a home sits on the market dropped from 77 days a year ago to 61 days now.

Brisk sales and tight supply usually combine to push prices higher; while the median price of a Portland home sold in April was up 5.5 percent from a year ago to $290,000, the supply issue would suggest the price gains be bigger, but Portland is a sticky market.

Read MoreHot LA housing market held back by tight supply

"It's very pocketed," said Ramsay.

Portland homeowners tend to like renovated older homes with character, he added, not new construction, and they stick to certain neighborhoods. Prices in some areas are therefore up more dramatically than the overall median numbers imply.

The only thing lacking in Portland is more listings. While prices may still be attractive, the longer supply stays this tight, the faster that great affordability will turn on its heels.