After seven or so years of bearishness on housing, I decided a few weeks back that the market was probably at or near bottom, and my wife and I started to think about buying.

I may have been a couple of months late on my call—at least here in Seattle. Houses are going on the market here and getting snapped up the same day. Bidding wars are breaking out. One house we really liked went on the market on a Tuesday, a few days into what we thought was our casual house search. By five o’clock that afternoon, the owners were weighing four offers. Any house we’ve seen and liked since then has gone into contract within a day or two of going on the market.

I had thought we’d be getting in during a buyer’s paradise, with tons of houses to choose from and sellers begging us to offer 90 percent of the list price. What’s going on here?

The Wall Street Journal’s Nick Timiraos, who writes for my (and Dean Starkman’s) old group at the paper, has some answers in a smart, timely front-page story on just this phenomenon. The headline, which leads with a Seattle anecdote, says, “Stunned Home Buyers Find the Bidding Wars Are Back.”

Stunned is a good word for it. My first reaction when our Realtor told us about the four-bid house was to jump on it ourselves and offer 105 percent of the asking price. Cooler heads prevailed, but it was a bit disturbing to see the 2005-2007 animal spirits bubbling up and succumbing to them myself.

Timiraos reports that the bidding wars are being sparked by low inventory, which is down from last year in all of the top 30 or so markets. Nationwide, it would take a little more than 6 months to sell all the houses currently on the market, where in 2008 that number was 11 months. In Seattle, inventory is at 3.8 months and the number of listings has plunged 38 percent from a year ago. San Francisco and Washington, D.C. have 3.4 months each. Phoenix, one of the worst-hit bubble areas, has just 2.4 months.

Inventories are declining for a number of reasons. Some sellers, unwilling to accept prices that are still down from their peak by one-third, are taking their homes off the market in anticipation of higher prices down the road. Meanwhile, investors have been outmaneuvering consumers for the best properties, often making cash offers that are quickly accepted by sellers.

In addition, some economists say that inventory levels are being held artificially low because Fannie Mae, Freddie Mac and the nation’s biggest banks have been slow to list for sale hundreds of thousands of foreclosed homes they currently own. The lenders slowed down foreclosure sales and repossessions after record-keeping abuses surfaced 18 months ago.

Some markets, like Seattle, are seeing a supply squeeze at the same time demand is rising significantly: No one wants to sell at the bottom; everyone wants to buy at the bottom. Existing-home sales are up 13 percent year over year and new-home sales are up 16 percent.

Interest rates are as low as they’re going to get and, from my experience anyway, it seems that financing is available. Our credit union pre-qualified us for a mortgage with just 5 percent down.

So if the national housing market is bottoming, does that mean we’ll see prices start rising quickly?

No, according to another good Timiraos piece.

Prices are still falling nationwide. Even here in Seattle, with its particularly low inventory, prices are down 6 percent from a year ago. Much of the reason is what the real estate industry calls shadow space—property that isn’t occupied but isn’t on the market.

Banks owned about 450,000 properties at the end of March, but there were an additional two million loans in some stage of foreclosure and around 1.7 million more where mortgage payments hadn’t been made in more than 90 days.

To put that in perspective, there are 2.4 million houses on the market right now. There are 4.2 million houses in some state of foreclosure or serious delinquency. That’s a huge overhang that would take years of solid demand to go through, though Timiraos notes that the dearth of new construction helps balance that out.

But regardless of whether we bump along the bottom for a few years or we actually see price increases, the Journal and Timiraos have focused on what may turn out to be an important inflection point in housing, which has strangled the economy for half a decade. While there are still millions of struggling homeowners, it really does look like housing overall is moving into a recovery, and that has huge implications for the economy as a whole.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.