The Case Shiller report for May was released this morning and shows that Portland has climbed back to near pre-crash levels.  From a peak of 186 in August of 2007 to a valley of 129 in February 2012 all the way back to 18 today!  Portland’s 7.4% year-over-year increase matches Seattle’s as the fourth fastest appreciating market in the 20 city index.

Initially there’s reason for bubble concern when we look at the Case Shiller provided chart.  I added the two trend lines and feel that concern is somewhat mitigated when we see that we’re now at a point where we’d expect to be based on steady appreciation.  The lines start at 2000 because the Index was reset to 100 1/1/2000.

A cause for concern will be if the market continues 6% or higher annual appreciation beyond 2016.  This isn’t to say the market is “safe.”  The market will respond to interest rates, the tightening of lending laws, the global and US economy, and the presidential election cycle.  Statistically, the pool of underwater buyers has dropped to those that purchased between August 2007 and January 2008 (not considering buying and selling costs in the equation).  Market value increases will increase the supply of homes that are available to come on the market and will put downward pressure on appreciation as well.