We're not in a housing bubble. Here's why

Fresh off news that Portland-area home prices eased slightly in June comes this: CoreLogic reports that fears of a housing bubble are overrated.

What’s more, the Irvine, Calif.-based real estate research firm predicts that rising mortgage interest rates will slow the market and curb double-digit price increases.

Over the weekend, the Regional Multiple Listing Service said the average Portland home sold for $313,900 in June, 10.5 percent more than a year ago, but about a point lower than in May. The easing suggests the torrid pace of home sales was easing slightly as spring gave way to summer.

CoreLogic affirms the trend, concluding that local prices are running 13.7 percent ahead of a year ago.

Oregon home prices are still 17.9 percent below their pre-recession averages, and above the national average of 14.2 percent.

Here are two more reasons CoreLogic thinks the housing market is not in bubble territory:

  • Housing affordability, as measured by median income and local home prices, is at a near high height thanks to low interest rates and home prices still below peak levels. Only Washington D.C. and Hawaii qualify as unaffordable. Oregon is considered one of the 25 least affordable states but home prices and income here are still above the “unaffordable” level, CoreLogic said.
     
  • All-cash sales peaked at more than 40 percent of all deals two years ago but have been receding ever since. Cash sales are a major driver of rapid increases in home prices, it said. In the future, the housing recovery will rely on traditional first-time home buyers and move-up buyers.

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