[jyl]

No-one I know who owns a house in North Berkeley/Albany/Kensington (for non-SF Bay folks, these are desirable residential areas in the East Bay) could afford to buy it at today's prices. We're talking $800K to $1.3MM homes owned by families with gross incomes of $100K to $200K. The way those homes sell is by families trading up from $400K to $500K homes (that currently buys you a nasty 1,200 sq ft fixer in the highest-crime areas of South Berkeley), or by families using aggressive loans. The first route breaks down when house price gains slow, and the second route will eventually be cut off when banks tighten lending standards. I've been seeing prices flatten and pull back a bit over the past year, homes staying on the market longer, selling under asking.

From what I've seen, Portland is a little better. You can still buy nice move-in 2,700 sq ft homes in nice areas all day long for $550K. But the price increases have been significant over the past few years. In the 66-home sample I studied, the average price appreciation over the past 3 years was about 15%/yr (eliminating obvious outliers that were probably bought as extreme fixers and had a lot of money dumped in them). To my eyes, this is no longer a cheap housing market, except by the inflated standards of the rest of the West Coast. Prices are still rising, as of this moment. I am told there's lots of Californians moving to Portland and bringing their home equity with them, either working for Portland companies or continuing to work their California jobs through a mix of telecommuting and physical commuting (techies, especially).

I'm in the market for a house in Portland. My expectation is that the house I eventually buy will keep rising in value for a year or so, then will roll over and decline, leaving me with a 0% +/- 10% gain/loss in 1-2 years - and I think a loss is more likely than a gain in that time period.

However, I'm planning to stay indefinitely, so my attention is more focused on getting a house/neighborhood where I can stay for a long time, and working like a dog so that my income rises.

- Oh yeah, the working bit - back to the salt mines.