The Dow Jones Industrial Average has bobbed along near its record high this week, scratching heights unseen since Jan. 14, 2000, when the blue-chip average finished at 11,722.98 during the height of the dot-com bubble.

The months following that high tide saw a rapid fall and a riptide of cash from stocks into other investments, including real estate. The Rogue Valley market was one of many to benefit from the infusion as investors poured money into relatively cheap land and houses.

That peaked sometime in the first half of 2005 when, according to an analysis compiled by First American Corp., 23 percent of the new home buyers in the Medford-Ashland area were investors, some of whom had never seen the property they were buying.

Buyers who during the real estate upturn purchased houses for their personal residences have fared well as their homes appreciated in value. But short-term real estate investors looking for a quick profit may now find themselves stranded in the slowing market. And that has contributed to a big increase in the number of homes for sale locally.

Jackson County's inventory of homes for sale crested at more than 2,000 in August. In the year 2000, it was typical countywide for no more than 900 homes to be on the market and during the buying frenzy of 2003 and 2004 inventories dropped well below 600 at times.

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"I think one reason for the increase of inventory is those investors trying to sell," says Bob Forest of Bob Forrest Loans & Investments. "The supply of new houses has competition from investors (trying to sell their properties), so there are excess lots and houses. The inventory is going down, though, and the good news is that prices are still maintaining."

One investment adviser says he's not surprised by the burst of activity.

"Most everybody is late to the dance," says financial planner Al Densmore. "They chase stock when the market is high and then they hear real estate is hot and get trapped. They're sort of lemmings following the crowd."

Rick Harris, former president of the Oregon Association of Realtors, says one reason the real estate market has gone stale is that many of the outside buyers who anticipated purchasing Jackson County houses did so while interest rates were in the 5 percent range.

"We used up the supply of buyers faster than we normally would," says Harris, who is with Coldwell Banker Pro West Ashland. "The investors who were thinking about buying here did when they thought there would be a run-up."

Harris says investors who treated houses like stock may have to wait awhile to get the return they hoped for.

"No doubt there were some people trying to do that, but I don't think it's anywhere near the majority," Harris says. "That's an anomaly where the housing market is acting like that short term and we're in a correction where things are going back to normal. It shows that in real estate it takes longer to make back the dollars invested and pay the closing costs."

Even though rising stocks are alluring, Harris doesn't think many owners are trying to convert real estate investments into cash.

"For the most part," Harris says, "out-of-the-area buyers have their nest-egg house here and they're hoping to retire in five to 10 years."

Michael Parks of Marples Northwest Letter in Seattle says because housing is less liquid, people are less inclined to dump a real estate investment than a poorly performing stock.

"People still have to live some place," Parks says. "The price increases Medford went through were higher because of its proximity to California. So it was exposed to the vagaries of the market more than other parts of the Northwest."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.