Housing Bubble Fears in Portland?

In June, Portland, OR single-family home prices rose to an average of $314,000—a 10.5% increase year over year, but a 1% decrease from May. Some analysts have taken recent double-digit increases as signs of a housing bubble, but these fears are likely overblown as the decrease from May to June reflects a decrease in velocity from spring to summer.

This decline in velocity is important given that housing affordability in Oregon, calculated as a ratio between median incomes and median home prices, is extremely high because interest rates are at historic lows. Moreover, all-cash home sales, which have been a major driver in rapid home price increases, are receding steadily from the 40% mark set two years ago.

Finally, statewide home prices are still 17.9% below their pre-recession averages, although above the national average of 14.2%.