For N.W. Hayden Enterprises to pull off its furious expansion into Portland's competitive restaurant scene, the firm needed an exacting recipe: equal parts sound plan, steely focus and surplus cash.

Instead, Hayden boiled over with chaos and red ink.

In mid-December, days before the company's Tondero opened in the glittery Fox Tower downtown, the unpaid chef walked. Nearby, Chayote Grill opened with a dirty awning, a temporary sign and no marketing plan to back a seasoned Boston chef. Trash piled up as fast as unpaid bills at Oregon City's most ambitious restaurant, Black Point Inn, despite a $200,000 loan of public money.

Spearheaded by veteran restaurant consultant Bill Hayden, the firm opened six restaurants in the second half of 2007 -- and once juggled as many as 15 projects at a time. Nearly 600 staffers were hired for restaurants in Portland, Oregon City, Vancouver and Astoria, many recruited from other restaurant jobs.

But by early February, Hayden's plan to stake his spot in Portland's growing reputation as the Next Food Place lay scrambled, fried and cooked.

The cash-strapped company abruptly shuttered four restaurants and killed plans for three others. Bill Hayden gave up his ownership in almost everything, including his namesake Hayden's Lakefront Grill in Tualatin.

Also left on the chopping block: broken dreams, breached promises, workers jobless in a tough market, suppliers and contractors holding unpaid bills, a financier out between $2 million and $3 million.

Still more striking: how respected restaurant consultants -- hired for advice on avoiding pitfalls of the business -- could have so thoroughly botched an expansion in Portland's trendy, if turbulent, restaurant market.

Even in the risky restaurant business, where a majority of startups can expect to fail within five years, the Hayden meltdown was unsettling.

"In 29 years in this business, I've never seen anything like this," said Tom Swafford, manager of the short-lived Tondero on the Fox Tower's second floor. "It's biblical, Old Testament."

"It angered me," said David Machado, a 27-year industry veteran who owns two Portland restaurants. "So many people out of work, chasing bills. There's a price to pay for all this, a cost to the whole industry, which is not doing well right now because of the economy."

Even a disconsolate Hayden told The Oregonian that the business failure dazed him.

"I take responsibility for all of this," he said. "I thought I could pull it off. It was never my intent to give anyone false hope."

Chasing a vision

Hayden, 59, tears up when he speaks of his passion for restaurants and their people. He describes himself as a concept guy and white knight who shepherds restaurant novices through the thickets of daily operations.

"Your project becomes our project," his consultancy asserted on its Web site.

For more than two decades, he labored in the offices and kitchens of the Portland area's restaurant scene. But Hayden admitted that something ate at him: lack of a presence in Portland's prestigious downtown market.

In 2005, Hayden formed an equal partnership with another industry veteran, Richard Arthur, 56, to start N.W. Hayden Enterprises. Arthur took charge of sales and contracts. Their consulting firm promised customers it would "take the worry out of your nights."

Both knew how sleepless those nights can be.

Hayden had filed Chapter 11 bankruptcy in 2003, claiming debts of more than $800,000. Foreshadowing his current plight, Hayden back then chose to open or manage three new restaurants on top of a full load of consulting.

All tanked. According to bankruptcy papers filed by his attorney, Hayden's time was "spread too thin" and he "was forced to admit he could not continue."

Arthur, too, claimed personal bankruptcy in 2005, claiming debts of $950,796 against assets of $385,525. He took his four food-service companies with him into bankruptcy. Arthur told The Oregonian he liquidated his personal savings to pay business debts.

Despite the bankruptcies, Hayden and Arthur continued in business together and built a strong clientele.

But, just as a few years earlier, Hayden decided it was time to run his own restaurants again. In 2006, he and Arthur rolled the dice on an upscale restaurant in timeworn downtown Oregon City, spending nearly $1 million -- well beyond what they budgeted -- to rehab a 1903 building. Oregon City's City Council lent $200,000 in urban renewal money, hoping Black Point Inn would spark a downtown revitalization. The city recently told The Oregonian that it did not know about the duo's bankruptcies.

Meanwhile, Hayden and Arthur agreed to help open a music-themed restaurant with local '60s rock icon Mark Lindsay.

Lindsay investor Gerry Frank, a successful restaurateur and contributing writer to The Oregonian, introduced Hayden to Aequitas, a deep-pocketed Lake Oswego investment company. Frank, who said he did not know about the bankruptcies, sits on Aequitas' advisory board.

In May 2007, Aequitas invested $1.175 million.

Flush with cash, Hayden and Arthur charged headlong into expansion. Hayden said he saw opportunity in real estate waiting to be grabbed and rehabbed on the cheap. Between consulting jobs, they launched a spate of their own projects under various company names, including Cutting Edge Restaurant Group.

Hayden and Arthur knew the dangers of rapid expansion. Still, they gambled that one restaurant would hit big enough to prop up the others.

"Things we were telling our consulting clients that you can never do, we were doing," Arthur said.

Chaos is served

Tondero was to be Hayden's play for downtown foodie respectability, and he made an inspired choice for the starring role: 31-year-old chef Amy Jermain, then working as a consultant. A rising talent who races motorcycles in her free time, Jermain said she was promised free rein to bring an independent spirit and her own take on Latin American cuisine to a mainstream restaurant.

"Tondero was going to be Paley's-meets-Le Pigeon in a 250-seat corporate restaurant," said Jermain, citing a cross between Portland's high-end sophistication and alternative artisanship. "I thought that was punk rock. We were going to shake it up, with music and supper clubs and small, regional wines. All the things chefs in my age group are into, but putting it in a big restaurant downtown."

But when Jermain showed up for work Sept. 16, she found the restaurant empty except for manager Tom Swafford, who had left a similar role at the Pearl District's stylish Bay 13.

"We were all on our own," Jermain said. "No computer. We used our own cell phones."

Things grew stranger. Vendors weren't paid, she said, making it difficult to test recipes. "Checks were bouncing left, right and center," Jermain said.

"I've been in town 10 years and earned respect of purveyors. When you open a place, you call in favors. If you jeopardize that, it's over."

Meanwhile, Jermain said, she asked Hayden the hard questions: Why aren't people working here? Why aren't checks processing? Where is the furniture?

The answer, she said, was always, "'Next week. We're opening next week.'

"Bill told me I could wash dishes at Black Point Inn in the meantime," she said. "That's not what I signed up for."

Jermain left Tondero days before its December opening.

A few blocks away, Paul Hyman, 36, was trying to hold down the Chayote Grill. Hyman moved to Portland last year, after working for Boston celebrity chef Todd English. Chayote, he said, opened in a half-finished state and he worked for weeks with "no contact with anyone" in management. Then he was called in to help salvage Tondero.

Still, he was a believer. Hyman said he was promised more than $50,000 a year, 7½ percent of profits and a job as chef at yet another project Hayden hoped to undertake: a reopening of the once-hopping jazz club Brasserie Montmartre.

Collapse follows

Aequitas officials began suspecting financial troubles.

Fed up with N.W. Hayden's clamoring for more money despite two additional loans, the investment firm demanded to review its books. With a gulp, they realized, the Hayden restaurants all told were losing between $50,000 and $100,000 a month.

"They didn't execute," senior managing director Brian Oliver said. "In retrospect, we should have all questioned the number of things they were doing."

Around year's end, Aequitas took over Tondero, Chayote and the Blackstone American Grill in Vancouver. Employees said they were reassured that Tondero and Chayote would go forward properly funded and organized.

Just weeks later, Aequitas, coming to grips with the full extent of the restaurants' troubles, shut them down. Oliver said the firm was not equipped to rescue the restaurants.

"I had to lay off 40 to 50 people," Hyman said. "It was just a mess. Some corporate suits made a decision that really hit people's lives. The (job) market out there now is very slim."

Hyman didn't hear an explanation for Aequitas' change of heart. "They just handed me the last payroll and said, 'Can you lock the doors on the way out?'"

By mid-December, N.W. Hayden and Cutting Edge -- beset with lawsuits and creditors, including the IRS -- ceased operations. Arthur went to work full time managing Mark Lindsay's Rock & Roll Cafe.

Hayden kept his stake in Black Point Inn and John Jacob's Waterfront Grill in Astoria, but closed both in January. He sold his 60 percent position in an Oregon City bakery to its operator for $1. He sold his 49 percent share in the still-open Hayden's Lakefront Grill.

"I had a dream," said Hayden, who winces as he recalls the ordeal. "I just really believed I could do it."

But Hayden's sentiments ring hollow to some.

"The No. 1 rule of expansion: If it's too quick, you explode," Hyman said. "If you're flying by the seat of your pants, it's Murphy's law. Things go wrong."

Aequitas said that with $200 million in assets under management, the Hayden blowup would not prove a significant setback for the firm. Although it checked references on Hayden and Arthur, managing director Oliver said, it did not know about their bankruptcies.

"We were backing two guys with 30 years of operating experience," Oliver said. "But as they transitioned from a consulting company to an operating company, they really didn't have the people or the processes in place."

Undaunted, Hayden has begun to move on. On Jan. 24, he started yet another company: Dreams and Solutions Restaurant Consulting.

"I obviously have to start all over," Hayden said. "In the consulting business, it's all about trust. It's all about what you've done lately."

Real estate in Portland, Ore., is arguably one of the West Coast’s best-kept secrets. In addition to ski resorts and coastal areas within driving distance, Portland real estate has median housing prices more affordable than most other major cities in the Western U.S. What investors find to be most remarkable about the real estate market in Portland, however, is the fact that it is growing, in spite of the subprime disaster sweeping the country. Its hardy performance begs the question: What exactly makes Portland so special?

A “softer landing”

“Portland’s [real estate] market did not have the massive appreciation that some of the markets that are hurting now did,” Charles Turner of Prudential Northwest Properties, and author of PortlandRealEstateBlog.com, said. “The result is that [the market] has experienced a much softer landing.”

And, unlike housing bubbles that eventually popped in other major U.S. cities, growth in Portland’s real estate market has been largely contingent on population and employment, Max Sinclair, a real estate broker and Realtor who specializes in luxury and investment properties in Portland area, said. This has lent itself to steady growth in Portland, in spite of a potential national recession.

“Oregon has one of the lowest foreclosure rates in the country,” Sinclair said. “The market [should] continue at a steady rate of growth of 5 to 7 percent during the economic recovery period.”

Impressive job growth in Portland is likely to maintain a healthy flow of residents to the Portland area. A recent projection by the Oregon Employment Department estimated an increase of 240,000 jobs over the next decade—an increase of 14 percent compared to the last 10 years, Sinclair said. Furthermore, it appears that Portland is becoming an alternate hub for technological companies in California.

“Intel has some of its biggest plants in Hillsboro, a suburb of Portland, [and] Yahoo! also selected Portland for its customer service center,” Sinclair said.

Growing demand for Portland real estate is compounded by a limited supply of properties within the city. This is because local authorities maintain some measure of control over real estate inventory by limiting the number of allowable property developments within the metropolitan area.

As a result of enforcing an urban growth boundary, “Portland [is] in a better position to weather the ups and downs of real estate investment over the long run,” Sinclair said.

In addition, Portland presents an affordable option for real estate investment in the western region of the U.S. The median cost of housing in Portland is $283,000, according to the most recently published NAHB/Wells Fargo Housing Opportunity Index for 2007; this is a great deal cheaper than the median price in its larger Pacific Northwest counterpart, Seattle, which is estimated at $380,000. The difference is even more dramatic when comparing Portland with major cities in California; median home prices in Los Angeles and San Francisco are $515,000 and $770,000, respectively.

Predictions for a buyer’s market

The real estate market in Portland may have weathered the subprime storm, but the investment climate has nevertheless been changing. Sluggish demand for single family housing in recent years has driven the switch from a strong seller’s market to one that favors the buyer, Turner said. Specifically, sellers did not act quickly enough in adjusting sale prices and had difficulty capturing buyers as a result.

“In a slowing market, [sellers] have to get in front of today’s market price, not chase the market down,” Turner said.

Consequently, the affordability of a buyer’s market opens up the opportunity for investors to make significant gains. Single family homes in Portland still present the best potential for return as long term investments, with appreciation in values that is typically higher than that of multi-family complexes, according to Sinclair. Further, rental of single family homes offers strong potential for cash flow, fetching lucrative rates in times of high demand.

In addition to the buyer’s market for single family homes, a new surge of condos in Portland will have a significant impact on the future of the overall real estate market. Although it appears the market for single family homes will remain somewhat strong, the plethora of newly constructed condos in recent and oncoming years is likely to weigh down other “strengths” in the market, Turner said.

“I think we’ll see [Portland] real estate going back to being a long term investment,” Turner said.

In terms of location, the most dramatic growth is predicted to emerge from places in the inner city, specifically in areas of Southeast and Northeast Portland in close proximity to downtown. Real estate prices are still relatively low—between $200,000 and $400,000—in these areas, and will rise relative to the demand for properties within the urban growth boundary, Sinclair said.

As for the suburbs, properties in the area of Lake Oswego, which has “the absolute best school system in the state,” should experience the highest rate of appreciation, Sinclair said. Because Lake Oswego has been developed to its near conclusion, the limited availability should drive a boost in property values.

Investment strategies

Experts have found the combination of rehabilitating and flipping properties to be a particularly successful strategy for investment in Portland real estate. For example, Turner and his wife, who invest in real estate personally, have employed a general strategy of purchasing single family homes that are intended for remodeling but are also in adequate “rent now” condition. Last year, the couple sold their first rental through a 1031 exchange and bought two more, both of which are being rented. They plan to remodel those to showroom condition at some point before reselling them.

“Rehabilitating and flipping projects that pencil out before appreciation [are] a sound investment,” Turner said. “Appreciation should be considered the bonus, not the driving factor when investing in real estate.”

Sinclair has noted investment strategies that capitalize on the transformation of undesirable neighborhoods. During the last five years, he observed many investors “flipping from one neighborhood to another,” particularly in areas that combine homes built between 1900 and 1940; these areas include Alameda, Irvington, Laurelhurst, Sellwood and Eastmoreland.

As these neighborhoods become less affordable, investors are venturing into less desirable areas, such as the Alberta Arts District, Sinclair said. Another area that offers opportunities for flipping is the St. Johns neighborhood in North Portland, an area that has not previously been considered a first choice among buyers. However, when it comes to making a profit from flipping, “affordability is the key,” Sinclair said.

It’s easy to see why, as the demographic of “very wealthy” people in Portland is considerably smaller than that of California or Washington, Sinclair said. Thus, “any property as close to downtown Portland as possible under $400,000 can be a good candidate for flipping” as well.

Retail properties in the Portland area present an innovative opportunity for long term investment. As neighborhoods grow, so will demand for nearby goods and services, Sinclair said.

“A few years ago, investors from California asked me where they should invest,” Sinclair said. Among other things, he recommended investment in retail properties located along Southeast Division Street, near downtown. At the time, the location was underdeveloped for commercial properties and consisted of few shops and ample warehouses in disrepair—a desolate scene that stands in stark contrast to what visitors now find.

“That stretch of Division Street [has since become] a major commercial hub,” Sinclair said.

Retail properties can also provide an ingredient that many investment portfolios lack: diversification. Investors in only one type of property may not get far because fixed income return and appreciation go in opposite directions, Sinclair said. In other words, a market that yields higher rental cash flow is likely to yield lower returns.

“My advice is to...spread things out,” Sinclair said. “It can be in form of residential and commercial mix of portfolio, or in different markets altogether.”

Sinclair, who invests in real estate personally, takes his own advice to heart.

“I tend to select income properties in specific growth areas spread out in different cities,” Sinclair said.

Investors should note that retail properties require a different set of skills than traditional residential investments; investing in commercial properties requires more “business savvy,” Sinclair said. For instance, retail property owners need to assess the likelihood that a candidate for tenancy will be able to run a successful business.

A city of surprises

Those who dig beneath the steady numbers of Portland real estate may be surprised by what they find: a city, and its outskirts, becoming increasingly modern. In addition to job and population growth, Portland’s gradual transformation can be attributed to a trend of revamped neighborhoods stimulated by long term investments.

But not all of Portland’s surprises are pleasant. The city’s visible hand in controlling real estate supply can also be felt in changed regulations on party sewers, and as a result, is burning holes in some investors’ pockets.

“Sewers are becoming a major hot point in Portland,” Turner said. “Many of the buyers of yesteryear [who] are today’s sellers have no idea what their sewer is connected to.”

The city has mandated that if a party sewer line needs repair, connected lines must be separated and individual owners must foot the bill, Turner said. “A party sewer is the party that no one wants to be invited to,” Turner said. “[My company] just saw an investor foot the $7,000 bill to replace and disconnect the sewer line.”

The housing market slipped some more in Douglas County when comparing October listings and sales to the previous year at the same time.

Average market time also jumped drastically in October for the year-to-date, increasing by more than three weeks from 107 days to 131 days, according to the Regional Multiple Listing Service.

New listings in the county dropped to 196, from 246 in October 2006, with the median sale price also dropping to $165,000 from $194,900.

When comparing year-to-date trends for January to October 2007 to the same period in 2006, they show closed sales and pending sales decreased 17.5 percent and 20.5 percent, respectively.

By comparison, closed sales and pending sales during the same periods in the Portland area decreased 11.3 percent and 13.9 percent, respectively.

Portland-based Real Estate Firm Nabs Top Honors in Adaptive Reuse Category for Rehabilitation of the Crane Building

Portland – Guardian Management LLC (Guardian), a Portland, Ore.-based real estate firm specializing in multifamily housing investment opportunities and property management services, is being awarded the 2007 Project of the Year Award in the Adaptive Reuse Category by Multifamily Executive magazine. The firm’s $22.3 million renovation of the historic Crane Building in downtown Portland stood out among roughly 170 award submissions. Guardian will be recognized at a special gala event held Oct. 3, 2007, at the Multifamily Executive Conference in Las Vegas, Nev.

“The Crane Building has been a special project for us, and we are extremely proud of this honor,” said Tom Brenneke, owner and president of Guardian Management LLC. “As a Portland-based firm, we are committed to fostering development in our own community. Rehabilitating the Crane Building has not only preserved an important local landmark, but it has also provided a new home for Guardian Management as we continue to grow our business throughout the western U.S.”

A Mixed-Use Development in the Pearl

The Crane Building is a seven-story, mixed-use, brick and concrete building located in Portland’s Pearl District. Originally constructed in 1909 by The Crane Company, the building was the regional headquarters and distribution facility for the Chicago-based pipe fitting and plumbing company. In 1963, it was purchased by American Rag and Metal and used as a rag and clothing processing facility. The 90,000 square foot building originally contained six floors and an adjacent single level shipping and staging warehouse.

Today, the Crane Building reflects an emerging trend to “recycle” underutilized historic buildings in Portland’s core. Once an industrial facility, the Crane Building now features seven floors dedicated to various uses: retail on the ground floor, office space – anchored by Guardian – on the second and third floors, and residential space on the remaining floors, including 30 market-rate lofts on floors four through six and two luxury penthouses on a newly constructed seventh floor. Restoration on the Crane Building began in October 2005, and the building received a comprehensive seismic retrofit.

The Crane Building’s historic designation required maintaining the integrity of the original exterior and brick work, and numerous partnerships were critical to bringing Guardian’s vision to fruition. Chevron TCI, Inc. was instrumental in the purchase of historic tax credits, and Heritage Consulting Group advised on strategies for maximizing value and preserving historic details of the building. Walsh Construction Company served as general contractor, and the architects were SERA Architects and Emmons and Associates.

All telephone numbers are area code 503 unless otherwise noted. family fun

THIS WEEK ONLY

Under the Autumn Moon: Chinatown offers a weekend of free events including a public parade, fireworks, outdoor movie screening, world stage with dancers, musicians and performers and free admission to the Portland Classical Chinese Garden (Sunday only). The weekend is produced by the Old Town Chinatown Business Association and private sponsors. Events 10 a.m.-10 p.m. Sat, 11 a.m.-4 p.m. Sun, along Northwest Fifth Avenue and Flanders Street. Details and schedule: www.portlandchinesegarden.org. Aquifer Adventure: The Portland Water Bureau's annual event teaches about groundwater protection and water conservation. This year's party has a pirate theme and includes a treasure hunt, canoe rides, live music and games. Noon-4 p.m. Sat, at the bureau's canoe launch area, Northeast 166th Avenue and Airport Way. Free.

Doll and Teddy Bear Show: Antique dolls, vendors, classes, bears, supplies and miniatures. 10 a.m.-4 p.m. Sat, National Guard Armory, 10000 N.E. 33rd Drive. Admission $3-$6. Details: www.dolls4all.com.

Aircraft Fly-In: The Pearson Air Museum hosts a show of 1930s and 1940s Stinson aircraft. Meet with the pilots and see the planes up close. The hours of the show are varied, but the museum plans to have the planes on view beginning Saturday afternoon, 1115 E. Fifth St., Vancouver. Details: 360-694-7026.

KID CULTURE

"The Boatman's Flute": The Brooklyn Bay hosts performances of a folk tale from Vietnam. After the performance, children are invited to meet and interact with the performers. Shows 10 a.m. Sat, 2 p.m. Sun through Sept. 23, at the theater, 1825 S.E. Franklin St., Bay K. Tickets $6. Reservations requested: 772-4005. Directions: www.brooklynbay.org.

Ladybug Theater: Tiny theater fans gather for these 40-minute performances with audience participation. Current show is Baby Bear's "I Bet You Can't Stop Talking for One Minute!" 10:30 a.m. Wed-Thu, through Sept. 27, Smile Station, 8210 S.E. 13th Ave. Admission $3.50. Reservations recommended; 232-2346.

BOOKS AND STORY TIMES

Powell's at Cedar Hills Crossing: 3415 S.W. Cedar Hills Blvd., Beaverton. Mo Willems reads from "Knuffle Bunny Too." 7 p.m. Wed.

Beaverton City Library: 12375 S.W. Fifth St., Beaverton (644-2197). The library offers preschool, morning, toddler, baby, evening and Spanish story times. Call for schedule.

At Multnomah County libraries: Online schedules and details at www.multcolib.org/events.

Sellwood-Moreland, 7860 E. 13th Ave. (988-5398). Children ages 2-6 are invited to experiment with clay. 11 a.m.-noon Sat.

grab bag

Troutdale Antique Street Fair: Vendors offers furniture, art, garden pieces and glass work. Live music in the Mayor's Square. 9 a.m.-4 p.m. Sun, on the streets of Troutdale's downtown area.

Pumpkin Patch Corn Maize: Get lost in the six-acre corn maze open daily 10 a.m.-6 p.m., and at night 6-10 p.m. Fri-Sun through Oct. 31. The farm also offers fall produce. At the Pumpkin Patch, 16511 N.W. Gillihan Road. Maze admission $5-$7; www.thepumpkinpatch.com.

fairs & festivals

Apple Harvest Celebration: The John Tigard House Museum welcomes families for a day of apple picking, cider pressing, toy making, wool spinning and old-time music. Noon-4 p.m. Sun, on the museum grounds, Southwest Canterbury Lane at 103rd Avenue, Tigard. Free.

Alberta Street Fair: It's the 10th anniversary of this neighborhood classic offering live music, food and art vendors, poetry, puppets, kids games and more. Alberta street is closed to traffic for this event. 11 a.m.-6 p.m. Sat, along Northeast Alberta between 12th and 31st avenues.

Chili on the Green Festival: The chili cook-off is the highlighted event, but families can also play in the kids carnival, check out the classic car show and listen to live music. The B.O.O.M. Pirates also perform. 10 a.m.-6 p.m. Sat, in the park across from City Hall, 1300 N.E. Village St., Fairview. Free.

Foster Art Walk: Along Southeast Foster Road from 50th to 92nd avenues you'll find more than 60 artists, street vendors, performers, clowns, live music and more. Festival hours: 10 a.m.-6 p.m. Details: www.myspace.com/fosterartwalk.

get active

Walk for Parkinson's: The annual Sole Support for Parkinson's 1K and 5K walks also include live music, community vendors, children's activities and information on the disease. Events kick off at noon, walk at 1:30 p.m. Sun, Willamette Park, 6599 S.W. Beaver Ave. Fee $10-$15. Registration and information: www.solesupport.org.

Learn to Square Dance: The Happy Rock'rs Square Dance Club offers three open house events with free square dance lessons and demonstrations. Open houses 3-5 p.m. Sun and Sept. 23 and 30, Abernethy Grange, 15745 S. Harley Ave, Oregon City.

open air

Beaverton market: Area produce, meats, seafood, baked goods, flowers, plants and live music. 8 a.m.-1:30 p.m. Sat, through Oct. 27, Southwest Hall Boulevard between Third and Fifth streets;www.beavertonfarmersmarket.com.

Eastbank market: Seasonal produce, live music, herb and vegetable starts, flowers, prepared foods and more. 3:30-7:30 p.m. Thu, through September, at Southeast 20th Avenue and Salmon Street; www.portlandfarmersmarket.org.

Hillsdale market: Vendors offer produce, plants, prepared foods and more. Each week the market includes live music, face painting and other children's activities. 10 a.m.-2 p.m. Sun, through Oct. 28, in the parking lot at 1407 S.W. Vermont St. Details: www.hillsdalefarmersmarket.com.

Hollywood market: Fresh foods in Northeast Portland with live music, children's entertainment and monthly cooking demos. 8 a.m.-1 p.m. Sat, through Oct. 27, between Northeast 44th and 45th avenues at Hancock Street. Details: www.hollywoodfarmersmarket.org.

Hillsboro market: The seasonal market offers fresh local produce and specialty foods, garden products, arts and crafts, live music and educational information. 8 a.m.-1:30 p.m. Sat, through October, Main Street and Second Avenue.

Market at Orenco Station: 10 a.m.-2 p.m. Sun, through Oct. 7, at Orenco Station Parkway and Northeast 61st Avenue, Hillsboro, www.hillsboromarkets.org.

Interstate market: Fresh area produce, baked goods, cut flowers, artisan cheeses, meats and fish. 3 p.m. Wed, through Sept. 26, at North Fremont Street and Interstate Avenue; www.interstatefarmersmarket.com.

Lents International Market: Growers market that showcases foods from around the world. Much of the produce is grown by immigrant and refugee farmers. Baked goods, plants, flowers and prepared-food vendors. 9 a.m.-2 p.m. Sun, through Oct. 14, at Southeast Foster Road and 92nd Avenue.

Portland Saturday Market: Vendors offer handcrafted gift items and whimsical art. Under the west end of the Burnside Bridge between Southwest First Avenue and Naito Parkway. 10 a.m.-5 p.m. Sat, 11 a.m.-4:30 p.m. Sun, through mid-December; www.portlandsaturdaymarket.com.

Tigard market: Featuring fresh fruits and vegetables, hot foods, garden plants, cut flowers and arts and crafts. 9 a.m.-2 p.m. Sun, through October, Washington Square Too parking area; www.tigardfarmersmarket.com.

museums/parks

Children's Museum: 4015 S.W. Canyon Road (223-6500). "Arthur's World" is on view through January 2008.

"Kids Care" teaches about healthy bodies and minds. "Building Bridgetown" offers construction fun for little builders. Make a splash in "Water Works"; dig into the "Dig Pit"; shop and prepare a meal in the role-playing exhibit "Kid City Market and Cafe." Hours: 9 a.m.-5 p.m. Mon-Sat, 11 a.m.-5 p.m. Sun; $7 ages 1-54, $6 seniors; www.portlandchildrensmuseum.org.

Columbia Gorge Discovery Center and Museum (The Dalles): 5000 Discovery Drive (541-296-8600). The museum offers displays and exhibits on the cultural and natural history of the Columbia River Gorge National Scenic Area and Wasco County. Hours: 9 a.m.-5 p.m. daily; $4-$8; www.gorgediscovery.org.

Columbia River Maritime Museum (Astoria): 1792 Marine Drive (325-2323). "Mapping the Pacific Coast" offers rare maps, books and illustrations that played a key role in the settlement of the Pacific Northwest. Ends 9/30.

View exhibits on the Pacific Northwest's maritime history. Listen to shipwreck survivor stories or learn to read signal flags. The National Historic Vessel Lightship Columbia is available for tours. An extensive collection of nautical artifacts is on display. Hours: 9:30 a.m.-5 p.m. daily; $4-$8; www.crmm.org.

High Desert Museum (Bend): 59800 S. U.S. 97 (541-382-4754). Andy Warhol's Athletes Series features famed sports figures of the 1970s. Ends 10/7. The museum features detailed indoor exhibit areas and outdoor exhibits including a walk-through pioneer homestead and a historic working sawmill. Hours: 9 a.m.-5 p.m. daily (except major holidays); admission $7-$15 for two days, $9-$18 for six days; www.highdesertmuseum.org.

Museum of the Oregon Territory: 211 Tumwater Drive, Oregon City (655-5574). View a covered wagon that made the trip on the Oregon Trail, ancient petroglyphs and Native American artifacts, a 19th-century pharmacy and a map of San Francisco filed in Oregon City when it was home to the only federal courthouse west of the Rockies. Hours: 11 a.m.-4 p.m. daily; $5-$7 using the Fall HOS Pass; www.historicoregoncity.com.

Oregon Historical Society: 1200 S.W. Park Ave. (222-1741). "Oregon, My Oregon" features artifacts, artwork, photographs, documents, visual presentations and displays that share the Oregon story. Museum hours: 10 a.m.-5 p.m. Tue-Sat, noon-5 p.m. Sun; $5-$10; www.ohs.org.

Oregon Maritime Museum: Willamette River harbor wall at the foot of Southwest Pine Street (224-7724). On the sternwheeler Portland, the museum offers models of early steamboats and sailing vessels, and a maritime library. Also view videos in the theater, listen to nautical music, take in interactive displays and shop at the museum store. Hours: 11 a.m.-4 p.m. Wed-Sun; $3-$5; www.oregonmaritimemuseum.org.

Oregon Museum of Science and Industry: 1945 S.E. Water Ave. (797-4000). "Body Worlds 3" on view through Oct. 7.

OMSI has a multitude of science exhibits to entertain and inform. Special museum hours during the "Body Worlds 3" exhibit: 9 a.m.-9 p.m. daily. Admission: $7-$9; additional charges for "Body Worlds," Kendall Planetarium, Omnimax films and the submarine USS Blueback; www.omsi.edu.

Pacific Northwest Truck Museum (Brooks): On the grounds of the Antique Powerland, two blocks west of Interstate 5, Exit 263. The museum tells the history of the trucking industry in Oregon. Hours: 10 a.m.-4 p.m. Sat-Sun and holidays, through September; donations; www.pacificnwtruckmuseum.org.

Oregon Electric Railway Museum: Also on the grounds of the Antique Powerland. Trolley rides noon-4 p.m. weekends, through Oct. 31; $5 general, 12 and younger free with paying adult; www.oregonelectricrailway.org.

Pearson Air Museum: 1115 E. Fifth St., Vancouver (360-694-7026). Collection of vintage airplanes and exhibits featuring area aviators, hands-on activities, restoration hangar, model airplanes and artifacts. Hours: 10 a.m.-5 p.m. Wed-Sat.; $3-$6; www.pearsonairmuseum.org.

Rice Northwest Museum of Rocks and Minerals: 26385 N.W. Groveland Drive, Hillsboro; 332-0659. View exhibits of minerals, crystals, fossils, petrified wood, meteorites and gemstones. Hours: 1-5 p.m. Wed-Sun; $3.50-$5; www.ricenwmuseum.org.

U of O Museum of Natural and Cultural History (Eugene): 1680 E. 15th Ave. (541-346-3024). "The Flood Zone" landscapes sculpted by the Glacial Lake Missoula floods are featured at the museum. Large-format panoramic photographs show the dramatic work of the Missoula floods. Opens Fri. Ends 3/23. Museum hours: 11 a.m.-5 p.m. Wed-Sun; $2-$3, family admission $8.

Velveteria: 518 N.E. 28th Ave. (233-5100). View more than 180 paintings on velvet from the 1930s to the present. Featured are "Creaturama" animals from this world and others. Gift store. Noon-5 p.m. Fri-Sun; $3; www.velveteria.com.

historic sites

End of the Oregon Trail Interpretive Center: 1726 Washington St., Oregon City (657-9336, ext. 114). The center offers interactive tours representing the journey pioneers took to reach the Northwest. Tours include living-history presentations, historical cinematic drama, hands-on activities and exhibits. Museum hours: 9:30 a.m.-5 p.m. Mon-Sat, 10:30 a.m.-5 p.m. Sun; $5-$7 using the Fall HOS Pass; www.historicoregoncity.com.

Hoover-Minthorn House Museum (Newberg): 115 S. River St. (538-6629). The boyhood home of President Hoover, now a museum, contains many of its original furnishings, including the bedroom set that Hoover used. Tours can be arranged by appointment. Hours: 1-4 p.m. Wed-Sun; 50 cents-$3; 538-6629.

McLoughlin House: 713 Center St., Oregon City (656-5146). This 12-room mansion was built in 1845 by Dr. John McLoughlin and his family. Hours: 10 a.m.-4 p.m. Wed-Sat and 1-4 p.m. Sun. The McLoughlin House is operated by the National Park Service as part of the Fort Vancouver National Site.

Old Aurora Colony Museum: Second and Liberty streets, Aurora (678-5754). The museum displays artifacts relating to the Aurora Colony -- furniture, quilts, books, photographs, clothing and tools used by the original German families that settled the area in 1856. Hours: 11 a.m.-4 p.m. Tue-Sat, noon-4 p.m. Sun; $2-$6.

Pittock Mansion: 3229 N.W. Pittock Drive, 823-3623. "Beautiful Botanicals" features 20 vintage prints from the collection of Elizabeth Burdon. Ends 10/31. Historic Pittock Mansion is open daily for touring. The 22-room mansion, built in 1914, has period furnishings and panoramic views. Hours: 11 a.m.-4 p.m. daily; $4-$7; www.pittockmansion.org.

Stevens Crawford Heritage House: 603 Sixth St., Oregon City (655-2866). "Hats on Parade" features vintage hats from the museum's collection. Ends 9/28. The heritage home, completed in 1908, is an example of Foursquare architecture. Authentic period decor in a house that commemorates the Harley Stevens and Medorem Crawford families, who were prominent in the settlement and politics of the West. Hours: Noon-4 p.m. Wed-Sat; $5-$7 using the Fall HOS PassDetails, schedule:www.historicoregoncity.com.

nature

Tillamook Forest Center: Weekend nature programs are free and open to all ages. This weekend's program tells the history of the fire towers of the Tillamook forest, 11:30 and 1:30 p.m. Sat-Sun.

Learn the habitat and history of the Tillamook State Forest, from the devastating fires of the 1930s and '40s to today's multiuse wilderness. The center offers free public access to activities, educational exhibits and a central location for up-close exploration of timber-management practices. There's a functional 40-foot-tall fire lookout tower, a suspension bridge crossing the river and a restored steam donkey at the center, 50 miles west of Portland on Oregon 6 (Wilson River Highway) near milepost 22. Hours: 10 a.m.-4 p.m. Wed-Sun; 815-6800, www.tillamookforestcenter.org. -

Sturgeon Viewing Pond (Bonneville Dam): The Sturgeon Viewing Pond and Interpretive Center features Herman, a 12-foot-plus sturgeon, in his natural environment, with underwater viewing. Other features include tour exhibits, trout-feeding ponds and a chance to see the return of spawning salmon. Open 7:30 a.m.-4:30 p.m. daily year-round. Reach the center off Interstate 84 near the dam; 541-374-8393. SEND IN YOUR PRESS RELEASES: Please submit notices at least 14 days before publication. Photos are welcome but cannot be returned. Submit listings to A&E Get Out calendar, The Oregonian, 1320 S.W. Broadway, Portland, OR 97201; or fax to 294-5029.

Since time began in Portland, Old Town has been that rough patch in the crook of downtown where the Willamette River makes its northwest turn. It's been home for the rowdy men of the forest and shipyards and, in recent years, drug pushers who've kept their street corner grip even through downtown Portland's renaissance.

But the churn of change -- the kind that can transform an entire neighborhood -- is starting to shake Old Town's century-old brick.

With prodding from Portland's urban-renewal agency, the Portland Development Commission, developers have seen beyond Old Town's stigma of crime and urban decay. The result, all sides hope, will be that rare big-city neighborhood that the poor, middle-income and rich call home.

Workers are pounding away on the "Made in Oregon" building to spruce it up for future University of Oregon students. Following the Ducks, Mercy Corps last week got the city's OK to move its headquarters and learning center into the neighborhood.

And the Bill Naito Co., fresh from resolving years of bickering within the larger Naito family, is ready to reshape a string of Old Town properties into condos, apartments, a boutique hotel, an alternative health center.

Old Town's old-timers have seen promising signs flame out before, and this version has a long way to go to meet reality. But even they say this time looks different.

"I think we are starting to see the start of some real change," said Paul Verhoeven, Saturday Market's manager.

A new beginning

Old Town's recent action started where a decade-long Naito family fight ended.

After developer Bill Naito died in 1996, his brother Sam and the children of both men couldn't agree on much about the family business, including their key Old Town properties.

For nearly 10 years, their real estate sat fallow as their dispute raged and the neighborhood sputtered along with them. Investors steered into the Pearl District, which hems in Old Town to the west, and left the neighborhood to crack dealers and social service groups that serve the homeless and drug addicts.

But after a 2005 resolution, one side of the Naito family operating as Bill Naito Co. set out to reinvest in their real estate.

Then the University of Oregon came calling.

The university wanted to move into the Naitos' White Stag building where the "Made in Oregon" deer flies.

The university was searching for a new Portland campus in a historic building and in a part of town that needed a boost, said developer Art DeMuro, who helped the school search. DeMuro bought the White Stag building, and UO signed a lease in May 2006.

News of UO's move caused others to give Old Town a look. "They made it legitimate for others to come in," said Richard Harris, executive director at Central City Concern, an Old Town nonprofit that serves the poor.

Then Mercy Corps followed.

Like UO, the humanitarian organization wanted to be an urban pioneer and spark an area that needed help. (The group is now in Portland just south of downtown.) Neal Keny-Guyer, the group's chief executive officer, also wanted to be in a historic building.

Old Town fit both requirements. "I just love the neighborhood and the feel of it," he said.

Last week, the city's urban renewal agency agreed to help Mercy Corps rehab the Skidmore Fountain Building and build a new one next door on land owned by the Bill Naito Co.

After UO and Mercy Corps, Old Town caught the buzz that fuels any neighborhood revival.

That's when the Bill Naito Co. followed Mercy Corps.

Hope snowballs

UO and Mercy Corps' moves will bring students and workers to Old Town and, they hope, push out crime. Their decisions made the Bill Naito Co. feel safe sinking even more money into its Old Town real estate, said Lou Elliott, who manages the company's properties.

By early 2009, the company hopes to rebuild a block on Naito Parkway as the new home for Ankrom Moisan Associated Architects, the Oregon College of Oriental Medicine and 55 high-end condos.

Following that, the Bill Naito Co. plans four other Old Town projects over the next five years. In some projects, it hopes to restore a historic alley system into something similar to Seattle's Post Alley.

From there, developer David Gold has plans for new creative offices in blocks that border the Naito projects.

Some wring their hands about what progress means for the people who've always called Old Town home.

Gentrification in other parts of town has pushed out the less fortunate. But Harris of Central City Concern isn't worried.

Most of Old Town's social service groups hold the power because they own their land.

"We're not leaving," Harris says.

So, you think Portland's downtown is almost filled up?

It's easy to believe, seeing a half-dozen or more tower cranes piercing the sky for about a decade. Developers have churned out an average 1.3 million square feet of condos, shops and offices each year since 1990. That's almost equal to two new Wells Fargo Centers -- at 41 floors, the state's tallest building.

A panoramic view of the skyline, photographed from a helicopter, brings the construction boom into a single, vast portrait of the Portland we know today. Take a look -- it won't stay this way for long.

Without so much as a zoning change, developers could double the 103 million square feet that now make up the central city. From the South Waterfront to the River District, from Goose Hollow to the Lloyd District, the city's zoning allows a virtual forest of high-rises. By the city's count, 400 acres of underused property -- think surface parking lots, or beat-up buildings worth less than half the value of the land they occupy -- is ripe for change.

No one knows how long it will take to fill all that land. At the current pace of construction, the doubling would take 75 years. It could take much longer: Downtown has plenty of competitors in the Portland region and worldwide. Or, perhaps the central city will boom beyond anyone's imagination.

Soon, "the city that plans" will launch an update of the central city, with new schemes for shaping the coming high-rise growth to fit the region's goals for urban containment. The present plan, adopted in 1988, opened the way for urban expansion into the Pearl District and South Waterfront. And an earlier 1972 Downtown Plan set out a vision for housing west of the Park Blocks that is only now bearing fruit.

These pages show some major recent and upcoming projects.

Who knows what's next?

-- Dylan Rivera

Downtown The region's traditional center of commerce. 232 acres Existing buildings: 37 million square feet Projected increase: 17 million square feet

Office: 6.4 million square feet

Retail: 900,000 square feet

Housing: 8,954 units Strengths: The psychological heart of the Portland metro area, downtown has the highest concentration of employment, hotels, mass transit and non-mall retail. West End, Old Town, South Auditorium, Hawthorne and Morrison bridgeheads have buildable sites on cusp of transformation. Central City's best bet for office towers and hotels. Weaknesses: High cost of development and parking. Many existing buildings complicate new construction. Homeless population scares off some employers, residents. Condo market lags Pearl District and South Waterfront. Lloyd District and Lower Albina

A mall, a convention center, two arenas and lots of underused land. Adjacent to Central Eastside Industrial District south of Interstate 84. 328 acres Existing buildings: 17 million square feet Projected increase: 28.4 million square feet

Office: 11 million square feet

Retail: 1.5 million square feet

Housing: 12,740 units Strengths: Lloyd area has zoning for the tallest, densest development outside the downtown core. Generous parking allowances compared with downtown. Great views west and east. Incomparable transit and highway access. Weaknesses: Arena and convention areas sleepy when those attractions are not in use. No neighborhood focal point. Not much built lately; major landowners passed on condo boom. Lower Albina nearly all industrial zoned, with Portland School District headquarters site a tough play. River District The Pearl District and Old Town north of West Burnside. 238 acres Existing buildings: 20.5 million square feet Projected increase: 21.7 million square feet

Office: 4 million square feet

Retail: 1.4 million square feet

Housing: 11,944 units Strengths: The Pearl comprises the region's strongest, most established urban condo market. Retail and restaurants draw from across metro area. North Pearl development sites ready to pop. Old Town section and Post Office hold potential, with complications. Weaknesses: Little employment presence aside from Brewery Blocks. Old Town stigma and historic district restrictions work against potential high-rise housing and offices closer to downtown core. North section still considered risky for offices. South Waterfront The city's newest urban neighborhood. 129 acres Existing buildings: 4.1 million square feet Projected increase: 25 million square feet

Office: 10.8 million square feet

Retail: 1.3 million square feet

Housing: 10,146 units Strengths: Plentiful vacant land with riverfront views. Oregon Health & Science University expansion forecast to last decades. Lush Pearl alternative now a proven high-rise, high-end condo market. Weaknesses: Needs roads, light rail and other infrastructure. A nonstop construction zone for decades to come. Biotech doesn't normally build to SoWa's tall, expensive, dense standard. University District Portland State University and its eastward expansion area. 50 acres Existing buildings: 3.9 million square feet Projected increase: 4.6 million square feet

Office: 1.4 million square feet

Retail: 200,000 square feet

Housing: 2,837 units Strengths: PSU on a growth path, led by student housing. Light rail soon to meet streetcar line. Fourth Avenue stretch developable. Nearby conversion of Portland Center from apartments to condos adds more homeowners to area. Weaknesses: Uncertain state funding for higher education over long term. PSU still an unproven employment draw. Students dominate housing market.

LOS ANGELES -- Kurt Montufar isn't stressing about the housing slump. He's actually hoping things get worse.

Like many wannabe homebuyers who were priced out of the market during the last boom, Montufar spends time these days scanning real estate ads and news reports to determine if it's time to take the plunge and buy.

Foreclosures rising? Great. Cash-strapped sellers pressured into lowering prices because they can't find buyers? Even better.

"Somebody else's misfortune could be my happy ending," said Montufar, 27, a resident of suburban Los Angeles.

Indeed, the advantage is shifting to buyers in many previously high-flying housing markets, as homes take longer to sell and prices level off or begin to fall.

Modest annual declines have been seen in cities such as San Diego, Boston, Las Vegas, Phoenix and Honolulu, according to first-quarter data on existing single-family homes compiled by the National Association of Realtors. Meanwhile, price gains of just 1.4 percent or less were reported in New York, Chicago and Washington, D.C.

In the Portland area, home prices this year have maintained high single-digit gains over the red-hot 2006 market. The region's default and foreclosure rates have stayed well below national averages.

Those numbers have left many people trying to "time" the market to take advantage of the slump. But experts said that can be risky because there is little consensus on how long the current lull might last.

In addition, the market forces that helped drive the housing boom -- affordable financing and the alluring prospect of escalating home values -- are no longer a given. Potential price breaks could be wiped out if interest rates rise any higher.

"In general, it is very difficult to time the market," said Raphael Bostic, associate director of the University of Southern California's Lusk Center for Real Estate.

"The real problem with that is you don't know when the floor is until after it's passed. If the floor is right now, you missed it," he said.

Montufar, an asset manager and part-time real estate agent, has little choice about waiting for prices to fall further.

He would like to pay about $500,000 for a home in the San Fernando Valley. However, the properties he likes are still priced about $650,000.

"At this point, I've got no choice but to wait and see . . . how low they get, so that it gets to a point where I can afford it," he said.

Others have already seized opportunities to buy.

Melanie Scalice, 36, a seventh-grade teacher living in the Boston suburb of Arlington, Mass., saved for years for a home. She decided to jump into the market when local housing prices began to dip after years of double-digit percentage increases.

"The timing has been great," Scalice said. "With prices going down, there's so much for sale that I had a lot to choose from."

Still, she had to go to Fitchburg, some 40 miles from Arlington, to find a home that suited her budget and need for space. She settled on a $199,000 condominium.

Areas outside big markets might still represent the best option for finding an affordable home.

"There are areas where prices will, at worst, stay flat, but probably continue to go up," said Patrick Lashinsky, CEO and president of Emeryville, Calif.-based ZipRealty Inc.

Home prices haven't lost much steam in the Northwest. Seattle's metro area, for example, saw its median price soar 12.3 percent during the first quarter.

In California, where home values more than tripled since 1995, sales have been lagging and price appreciation has slowed or fallen in major metro areas.

Prices have declined sharply in regions that saw major home or condo construction in recent years, such as Riverside, San Bernardino and San Diego counties.

Even if prices fall further, it could be tough for buyers to find affordable financing if interest rates increase much more.

The Federal Reserve raised the federal funds rate from 1 percent to 5.25 percent between June 2004 and June 2006. The rate, which can affect mortgages, has held steady since then.

Meanwhile, the monthly average interest rate for a 30-year fixed mortgage crept from a low of 5.23 percent in June 2003 to 6.26 percent last month, according to mortgage giant Freddie Mac.

In addition, lenders have tightened standards in response to a surge in defaults by subprime borrowers, and a number of subprime lenders have gone out of business altogether.

A number of wannabe buyers are pinning their hopes on foreclosures, which some studies predict will explode during the next two years as adjustable mortgages reset to higher interest rates.

Foreclosure activity jumped 62 percent nationwide in April from the year-ago period, according to Irvine-based RealtyTrac Inc. Among the states with the highest foreclosure rates were Nevada, Colorado, Connecticut, Florida and California.

Gino Barragan of La Puente, Calif., a lifelong renter, was among the hundreds of people who attended a recent auction looking for a good deal on a foreclosed home.

Barragan, 34, was hoping to find a condo costing less than $300,000. He found only one that he liked within his price range.

"I am willing to wait, but I'm keeping my eyes open," said Barragan, a teacher.

Bruce Norris, president of The Norris Group, a real estate investment company, said now might be the best time to purchase a home, if the buyer plans to live there for 10 years.

"I'm not sure that I wouldn't rather pay today's price with today's interest rate than count on a big discount and the wild card that interest rates might be very different," Norris said.

"It would not shock me to have a 10 percent interest rate by the end of this negative cycle."

Live in Seattle? If you own your home, chances are you're celebrating.

That's because the city's median home price in the first quarter of this year hit $380,200, an increase of 12.3% from a year earlier, according to data from the National Association of Realtors (NAR). Median home prices in the Pacific Northwest as a whole soared; in Portland, Ore., prices jumped 8.9%, and in Salem, Ore., they grew 15.6%.

Southern metros also boasted gains. In San Antonio, prices went up 11.2%, and Austin, Tex., prices climbed 5.4%. Charlotte, N.C., and Raleigh, N.C., rose 6.4% and 6.3%, and Richmond, Va., and Norfolk, Va., improved 6.2% and 5.9%.
In Pictures: Best U.S. Housing Markets
In Pictures: Worst U.S. Housing Markets

"What we're seeing now are the areas which still have a strong economy, but didn't have the overheated prices [during the housing boom], are the ones holding on strong now," says Kermit Baker, a senior research fellow at Harvard University's Joint Center for Housing Studies.

In the Northeast, the New York City metropolitan area turned in a steady 1% growth rate, and smaller metros like Albany, N.Y.; Trenton, N.J.; and Allentown Pa.--which improved by 6.3%, 7.1% and 5.8% respectively--helped overcome Boston's continuing slump to lift the Northeast to a 1.2% overall price growth, making it the only region in the black.

Now the bad news.

Cloudy Skies
Median home prices in Florida are down, according to NAR: Tampa by 2%, and Sarasota, Palm Bay and Daytona by an average of 9%. Overall, Florida prices plunged 25%, making the Sunshine State not so sunny. Miami, however, which had been hamstrung early in the housing downturn, improved by 2%. The rally may be tenuous however, as 23% of Miami housing loans are subprime, according to First American LoanPerformance, a mortgage data provider.

"We've had 30 subprime lenders go under, which leads to a tightening of credit," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm of lenders nationwide. "That adds one more barrier to transactions, something that couldn't have come at a more delicate time for the housing market. On a national level, there are a lot of markets which are going to have some problems."

The Gulf Coast, where home prices had roared back at a double-digit clip the year following Hurricane Katrina, is one such market. Biloxi, Miss., grew by 15.7%, and Baton Rouge, La., by 9.7%, but the subprime hammer came down on New Orleans, where a 20% delinquency rate on subprime loans contributed to an 11% drop in home values, the NAR reports.

Worse News To Come?
For many markets, things may get worse before they get better. Nationwide, prices fell by 6.6%, a number that makes sense at this point in the housing cycle, experts say.

"When housing prices slip, nothing really changes until you try to sell, which is what we've had happen in the last couple of months," says Miller. "I don't think the housing slowdown has fully hit the national economy yet."

Overexpansion was a problem for most metro areas. Homeowner vacancy rates stood at 2.8% in the first quarter of this year, a statistically significant rise from the 2.1% rate a year ago and the 1.7% average between 1995 and 2005, according to the U.S. Census Bureau.

Those high inventory numbers flatten prices and make new development less lucrative.

"It's becoming more difficult to put together financing for new development projects," says Miller. "That'll actually provide some constraint on supply, but that's a couple years down the road. You figure the lead on new development is probably two years, so it's going to be a couple years before units stop coming off the conveyor belt."

Moving forward, there is concern surrounding the strength of the national macro economy. In the first quarter of 2007, growth came in at a disappointing 1.3%--hampered by 4% inflation--but the Federal Reserve predicts growth between 2.5% and 3% for the remainder of 2007.

"We do have a massive inventory correction, which will happen a lot easier and a lot less painfully if it continues to happen during an economic expansion," says Baker. "The fear is now that even though the direct housing hit was absorbed, the indirect hit could be serious too. We're into that now, but it doesn't look like it's enough to throw the economy into recession."

Some might disagree. Fears about the ripple effect of the housing market have traders particularly bearish.

The S&P/Case-Shiller housing futures market on the Chicago Mercantile Exchange is based on repeat sales of homes across 10 markets ranging from Boston to San Diego. There, traders are betting on a 4.5% decline from now until next year.

"There's a limitation to the futures market, because it only trades one year forward," says Fritz Siebel, a broker with Traditional Financial Services, the largest trader of housing futures. "For 2007 to 2008, the market doesn't look good, but it doesn't mean there's not a bottom around the corner."

As recently as a year ago, nearly any house with a for-sale sign received offers within a few weeks. And anyone with a pulse could sell a home.

Now, buyers and sellers are studying up on the Internet like never before, also seeking more advice from seasoned pros.

That's just one observation among many made by the Portland area's top real estate agents at the 2007 Portland Real Estate Summit on Wednesday. For the fourth consecutive year, Cornerstone Mortgage Corp. gathered top-producing agents from many residential firms for a wide-ranging discussion of the market.

At a time when the national housing market is mostly gloomy, the top agents said they're having trouble convincing clients that Portland's market is different. Here are excerpts of the discussion, including questions posed by The Oregonian, edited for length and clarity:

With all the news and data about a housing slowdown, is this a buyer's market yet?

Billy Grippo: I'd bet the seller's side -- just by a hair, though.

It's still better to be a seller, if you're not a desperate seller. And as long as you realize you're going to base your sales price and your life plans on your neighbor's house that sold last month, not last year.

Sherry Francis: And if you do your homework. You have to prepare your house to sell. You have to clean them, you have to paint them.

Brian Bellairs: There's a lot more homes on the market, a lot fewer homes in escrow, and yet prices are increasing.

That's a pretty big incongruence out there. Days on the market are growing so much, and yet there's pretty good growth in appreciation right now.

Kathy Hall: There's a lot of inconsistencies between areas, close in, farther out.

I'm seeing the $2 million-plus market very weak right now, but at the same time, under $2 million it's very strong, stronger than last year.

There's so many mixed messages going on out there to consumers, to buyers and sellers.

Kathy MacNaughton: We're finding, in the condominium market, under $2 million, it's very healthy. Over $2 million, it's a different world.

How has the slower market this year changed your relationship with your clients?

Peggy Hoag: Last year at this time, nobody would listen to us as brokers. They thought that we didn't know what we were talking about on price. . . . We were struggling with that.

Now, they're listening to us, and they're listening to the (comparable sales), and we can actually price homes at a price that they will sell.

Hall: They're asking me, "What price do I need to price my house at to get it sold?" They're asking me, they're not telling me.

MacNaughton: It's been fantastic, because what buyers want from me is expertise. They come to us as a trusted source of advice, and they didn't do that two years ago.

Mike Escobar: I deal with the Hispanic community. I can see a tremendous amount of people coming into the market with smart questions. . . . They go to the Internet and get a lot of information.

How are buyers' attitudes different now than before?

Todd Prendergast: There's been a big shift since October-November. Buyers were brutal. They were in the worst mood I can remember: very cynical, very negative. And that all shifted come January 1. If that hadn't happened we wouldn't be talking about a seller's market.

Francis: People get surprised because the house they were circling around on -- boom, it's gone.

Lee Davies: There is selection out there. It reminds me of the market from '95 to 2004. You'd want to go show someone five properties on Saturday, and they'll actually be there on Saturday to show.

But when you see it and you think it's good, you have to move, there's no doubt.

Have buyers' changing expectations complicated things?

C. Morgan Davis: Keeping a buyer and seller together is tougher. There's more of a tug of war after the inspections. . . . They're coming back with a lot more of a vengeance.

Grippo: Last year you could sell a broken sewer line, this year it's a lot harder.

M.J. Steen: I'm spending time with buyers. . . . They haven't had to negotiate before. Before, they could bid over it and walk away with it.

You've got to be pre-qualified. You have to have managed expectations going into the home inspection because they all want to renegotiate the price of that house after they've bought it.

Good agents can do that, but the younger agents that just got started don't know how to do that.

The mortgage industry is in turmoil. Companies are going bankrupt right and left. Are you seeing buyers in trouble because of this?

Bellairs: In Portland, I don't think it is that big a deal at all.

As a listing agent, if someone brought in a preapproval letter, last year I would have said "Great, they're preapproved." Now, I'm going to look a little harder at how much they're putting down.

If someone comes to me putting zero down or very little earnest money, I'm going to scrutinize the heck out of it.

Will Haskins: With a lot of lenders going down, it's important for the first-time buyers to know that they still can afford something.

That's going to be more and more important as there's more media coverage of these banks going under.

A great city requires a mix of housing and a great city has responsibility for housing across an entire spectrum. This includes housing for the homeless, supportive housing, public housing, subsidized rentals, market rentals, home ownership and finally the move-up or dream home. Such an overall strategy is essential for a major urban center such as here in the Puget Sound area.

It is important to form partnerships, where developers, non-profit advocates, the private and public sectors work together across that continuum to collaboratively and creatively find the most effective solutions to the housing needs of this great community.

Seattle is a very special city that has garnered "the best" status numerous times. But, like cities all across the country, it has a housing crisis. Fewer than 50 percent of Seattle's workers live in the city, leading to many other urban problems. Sen. Patty Murray, D-Wash., is right in calling the lack of affordable housing in Seattle and elsewhere a "silent epidemic."

It affects everyone. I need not tell you what that does to the productivity of a worker -- say a single mother who commutes an hour or more each way -- when her child is sick or her house floods in a winter storm. Higher fuel and commuting costs mean middle-income families have less disposable income. Poor families have the choice of living farther away from the city or stretching budgets to pay for food, clothing and medical care because they pay more than they can afford for in-city housing.

In this region you have the expertise, political will, and a commitment to improving the quality of life for the whole community. In Seattle, you have taxed yourselves to create affordable housing. In King County, you have a commitment to end homelessness by 2012.

While HUD secretary and since, I have visited more than 200 cities and have seen some of the best, including Seattle's New Holly and High Point communities where HUD's HOPE VI program was used to combine rental and home ownership alongside new public housing.

Land is one of the biggest drivers of the ever-escalating cost of new housing development. Public sector leaders can make publicly owned land available -- vacant sites, underused sites, parking lots, lower density uses, surplus public land. A King County ordinance says, "Parcels which are declared surplus by the county should be reviewed as to whether they can be sold or leased for affordable homes." As a result, Woodinville has built Green Briar Heights with 170 affordable rental and home ownership units.

Another group that traditionally owns urban land is the faith-based organization. The Church Council of Greater Seattle is a driving force in efforts to end homelessness. Churches, temples and mosques may be major contributors to the development of housing. Imagine a community of town homes for homeless women and their children built above a large church parking lot.

Finally, with respect to making sites available, revising zoning policies changes the capacity of the land by increasing allowable densities and reducing minimum lot size. In the Williamsburg section of New York City, 10,000 homes were built; 3,500 were affordable through this strategy.

We are in a new time, with new imperatives, and it is worth looking at zoning with a fresh eye.

The second strategy is to reduce zoning barriers by encouraging zoning that supports a diversity of housing types, removes restrictions on multifamily housing, manufactured homes and accessory dwelling units. Many bugaboos against multifamily can be addressed with insistence on quality design. Multifamily housing units can blend into the neighborhood architecture or look like single family homes.

Noji Gardens, here in Rainier Valley, was cited by the Urban Land Institute, Fannie Mae and Homes for Working Families as one of the most innovative strategies for building housing that working families can afford. Creative use of modular housing can cut as much as 15 percent off construction costs.

On the money side, many communities are using tax increment financing to great success, although not currently allowed in Washington. A state constitutional change may take years to accomplish; however, this could become a key long-term strategy for Seattle and the state. Portland is using tax abatements for affordability. Seattle also has a tax exemption program, but it needs to be re-evaluated to make sure it reflects current market conditions. Housing trust funds are another option.

The next category is generating capital. Seattle has the Housing Levy funds, which is a great start, but many more resources are needed throughout King County. You also are blessed with a robust and cutting-edge philanthropy community. For all the important human services that are publicly and privately funded, the National Alliance to End Homelessness and others have adopted a Housing First strategy because having a roof over one's head is the first step to addressing other issues that might affect people. Funding in all communities that provides housing along that continuum from homelessness to home ownership is the first step.

The next category is inclusionary zoning. I know it's immensely controversial but it has worked in particular places. More and more cities will be recognizing inclusionary zoning is the only way to get the market to work, even those cities where public officials have traditionally been opposed.

Another set of strategies involves preserving the existing stock. As contracts end on project-based Section 8, and 20- and 30-year contracts end their affordable status, communities are developing ways to try to ensure that the units stay affordable. New York City has an ongoing effort by prioritizing use of tax credits, lending to owners for improvements and tax abatements.

Finally, on the buyer's side, cities are using strategies such as down payment assistance -- like here in Seattle -- loans or grants or forgivable loans or silent seconds, federal funds or locally derived funds, funds recycled to other families, and all kinds of strategies related to how to provide down payment assistance. Finally, homeowner education and foreclosure prevention strategies are a must in today's market.

It's hard to imagine a great city that doesn't have a mix of housing so that it can keep a mix of its population, its vitality, its vibrancy. More and more city officials are seeing this and acting. Constituencies are changing. Today, the constituency of people who feel they can only dream of homeownership, who are having to travel those immense distances, who are living in over crowded and substandard conditions, stand out and cry for action. From homelessness to home ownership at every step of the continuum, it is important to have governmental leadership of the kind you have in Seattle and King County.

Subprime loans, generally at higher interest rates, accounted for 17 percent of new mortgages in Oregon in 2006, down from 20 percent in each of the previous two years, according to First American LoanPerformance. The figures include first and second mortgages, so some subprime borrowers with two mortgages would count twice.

Those percentages were below the national average each year by 4 to 6 percentage points, said Bob Visini, vice president of marketing for LoanPerformance of San Francisco.

''You have exposure, but your exposure on average is less than what the nation is feeling,'' he told The Oregonian newspaper. ''Is there still cause for concern? Sure, but at the same time you can feel good that you're not Michigan or Ohio.''

Among all outstanding mortgages nationally _ including those made decades ago _ almost 15 percent are subprime, according to LoanPerformance data for December. In the Portland area, the comparable figure was 9.8 percent.

Six years ago, the share was more like 2 percent nationwide, or about one of every 50 mortgages.

Nationwide, slightly less than 12 percent of subprime mortgages, excluding second mortgages, were 60 days late and considered in danger of default. In the Portland area, the figure was 6.9 percent.

Subprime lending began more than two decades ago as a way to increase home ownership, said David Botieff, a branch manager for Wells Fargo Home Mortgage in Clackamas.

Poor credit scores that had kept some people out of the housing market aren't necessarily the result of financial recklessness on the part of borrowers, Botieff said. A divorce, medical problems or sudden job loss can cause financial stress that shows up as a low credit score, he said.

Even casual observers of Portland's high-rise condominium construction wonder when the air will drain from the urban condo balloon.

The answer to that question matters intensely to the bankers who have financed the condo boom with hundreds of millions of dollars in loans. Wells Fargo Bank, which has financed construction of 1,739 units since 1996, has the most on the line. Its construction loans and mortgages for urban condos in Portland total more than $1 billion during that time.

Nelda Scott Newton, Wells Fargo's manager of commercial real estate lending for Oregon and Southwest Washington, found in a recent market study that even with nearly 3,500 units in the pipeline, there's no cause for worry about a saturated market. Even if demand fell by half, she said, empty condos would still sell within about a year after completion, she believes.

Of course, bankers have been wrong before, most famously in the 1980s. Newton discussed her assessment of the condo market earlier this week. Excerpts are shown here, edited for clarity and length.

The condo market and the overall housing market have slowed down in the last year. Do you think we're overbuilding condos?

Well, the condominium market continues to absorb and do well. When one looks at all of those cranes throughout the downtown area, it's important to remember that there's a lot of product differentiation among the projects -- The South Waterfront, the Waterfront itself, the Pearl District, the Northwest, the Arts District (near Portland Art Museum).

There are studios, up to million-dollar-plus penthouse units. So there is a depth and maturity to the market that didn't exist five to 10 years ago.

What did you find in your recent market study?

Right now, there are about 3,500 units under construction or in planning. That is roughly half what was built in the last eight to 10 years, so it is quite a large number.

Developers typically start to market their projects about a year before the project is completed. In the past, these projects have been pretty much sold out by the time the construction is completed.

That changed with the last couple of projects that came into our market. That frenetic pace has slowed. And the rate of absorption of the units has slowed.

In this study, how deep a downturn did you assume the urban condo market would suffer?

Because we could ascertain there was a slowing, we assumed the market would slow 50 percent.

We assumed these projects would be 50 percent sold at completion, and instead of the units selling at eight to 10 units month, that they would absorb about three units per month. Our intent was to see how many units at one time, excluding resales, might be unsold and available on the market.

If new buildings are 50 percent unsold upon completion, who goes bankrupt? Does the sky fall?

No, we don't think the sky falls. Assuming that occurs, some time around the first quarter of 2008, we would have conceivably around 700 or 800 standing, unsold new units -- so very different than anything we've experienced to date. Also, this is a more conservative assumption than is likely to exist: We aren't predicting a 50 percent decline in the market.

We assert that there's a potential for a year of inventory under this 50 percent scenario. That's something that our market can weather, that our developers can weather. Interest rates are still at historically low levels, we still have good in-migration, and we have a nice quality of life. There are unique attributes to Portland, coupled with that being a manageable number that gives us confidence that the market will be fine for downtown housing.

Is the Portland condo market more risky, or less, than other markets? How does our market compare to other markets?

We've enjoyed a healthier market in large part because of the control by our local developers. We're a smaller market, so we haven't attracted some of the outside national capital that some of the larger markets have attracted. We also haven't had the level of speculation that other markets have seen. That's really a positive for us.

When there's too much speculative investment, it creates the appearance of demand that doesn't really exist. We estimate that the units that recently sold, about 15 percent have sold just for investment purposes. In some of the overheated markets, those figures are as high at 70 percent, and that makes a market that is not sustainable.

The fact that our market is returning to a more normal, sustainable pace is positive because that discourages speculators. So we haven't had an excess of speculators to begin with, but people are further deterred at this point from going out and selling their soul to buy two or three units to flip them and make a quick profit.

That, coupled with the fact that the developers have actively discouraged speculative investors, leads us to conclude from a pretty small sample that 15 percent plus or minus is what we might be experiencing in our market.

People tend to think that condominiums are more volatile than detached housing, in part because of a severe downturn in the 1980s. Do you think that's still the case?

In the last 10 years nationally there has been a trend toward downtown living and efforts by cities across the country to revitalize their downtown to make them 24-hour centers. There are many reasons people cite for the trend: demographics, baby boomers, people downsizing, lack of available land. So there are many variables that account for the booming condominium market.

We think that urban living is an established and desirable lifestyle choice that's not likely to just evaporate. Particularly, when we have a city like Portland that's really nationally and internationally recognized as a very attractive, vibrant community.

Certainly real estate is cyclical and remains cyclical, but we drew comfort from these numbers that indicate that we don't have an excess supply, we have a manageable supply, even with a downturn in the market.

There's a perception in the community that what's fueling the condo market here is Californians relocating with high equity from sales of homes there. Is that your perception of what's driving demand here or is it more diverse than that?

Yes, there are people who have moved here from out of state, including from California, Idaho, Washington.

Seven or eight years ago when we were financing these, the first response was "People from the West Hills will want to sell their homes and downsize." That has been some element, people from suburban areas, that has been an element, people who live on the coast and still want to have a tie to the city. . . .

We've derived comfort from the fact that there really is no single demand factor that can be compromised and undermine the health of the condominium market. We view it as very positive that there's not one single answer to where these buyers are coming from.

WASHINGTON — The slump in housing deepened in the final three months of last year, with sales of existing homes falling in 40 states and median prices dropping in nearly half the metropolitan areas surveyed.

Although Washington state's sales of houses and condominiums declined 16 percent, prices continued to climb, thanks to a generally strong economy.

In the Seattle-Tacoma-Bellevue area, prices rose 11.3 percent in the fourth quarter compared with a year earlier, the National Association of Realtors reported Thursday. Spokane prices were up 12.2 percent, and Portland up 11.2 percent.

Formerly red-hot areas were among the hardest hit as the five-year housing boom cooled considerably in 2006.

While some economists think the worst may be over for housing, others predicted more price declines to come in some areas until near-record levels of unsold homes are reduced.

The Puget Sound area is not now reporting an excess housing supply.

At the end of January, King County had a three-month supply of unsold homes, according to the Northwest Multiple Listing Service.

Economically hard-hit parts of the country have a year or more backlog, and prices reflect that. In Detroit, for example, homes are available for as little as $1,500. Both jobs and buyers are scarce there.

The Realtors report, available at http://www.realtor.org, said the states with the biggest declines in sales from October through December compared with the same period in 2005 were: Nevada, down 36.1 percent; Florida, down 30.8 percent; Arizona, down 26.9 percent; and California, down 21.3 percent.

In all, the Realtors said sales declined in 40 states, six states showed gains and one state, Utah, had no change in activity in the final three months of last year. There was not enough information from Idaho, New Hampshire or Vermont to make a comparison.

Nationally, sales declined by 10.1 percent in the fourth quarter compared with the same period a year ago. The national median price — the point where half sell for more and half sell for less — fell to $219,300, down 2.7 percent from the fourth quarter of 2005.

In all, median home prices fell in 49 percent of the 149 metropolitan areas surveyed, the largest percentage of areas showing price declines in the 27-year history of the Realtors' price survey.

David Lereah, chief economist for the Realtors, thinks the report might represent the low point in the current housing slowdown.

"When we get the figures for the spring, I expect to see a discernible improvement in both sales and prices," he said.

But Mark Zandi, chief economist for Moody's Economy.com, predicted that home prices in many parts of the country would continue to be under pressure for the rest of this year as the market works through still-large inventories of unsold homes.

PORTLAND -- They hang from spacy curved handles and look like blunt silver bullets, or maybe some sort of giant runaway gel tablets, as they glide back and forth across the freeway.

They look like the future. They are the future.

If you've driven along Interstate 5 through Portland in the past six months, you've probably wondered what in the world was going on near construction of the high-rise condos in the South Waterfront District. What is that bizarre, futuristic looking steel tower by the freeway? And what are those overhead cables for?

They're for you -- so you can ride from Oregon Health & Science University's Center for Health & Healing, which opened along the waterfront in October, up to OHSU's main campus on Marquam Hill.

Two-hundred seconds.

That's how long it takes, rising or descending at a whopping 22.7 mph. Might not seem so fast, but since the two sleek Swiss-made silver cabins of the $57 million Portland Aerial Tram are part of a tramway unlike any other in Pacific Northwest history, it's not a bad way to ride. Not to mention the 360-degree view from 500 feet up in the air on a cold, clear, crisp winter day.

"I've never seen so many smiles," says John Burnham, OHSU's tram operations coordinator, of the first day OHSU employees were allowed to ride, Dec. 15. The city-owned tramway opens at the end of this month.

"That was amazing," says an OHSU employee as she leaves the upper-tram terminal. "Amazing!"

It's so very European, this tram that takes you up, up and away, with a birds-eye view of not only Mount Hood and Mount St. Helens, but the Willamette River, downtown, the Rose Garden arena, anything and everything that is P-town.

The Portland Aerial Tram, or PAT, is billed as being like no other aerial tram ever. Anywhere. It is designed and constructed by Doppelmayr CTEC, a North American subsidiary of Switzerland-based Doppelmayr, in conjunction with the Portland Department of Transportation.

The tram is similar to New York City's Roosevelt Island Tramway and many all over Europe, but no evidence could be found of an aerial tram being constructed specifically for a business such as OHSU, Burnham says. All other trams like it are strictly commuter, tourist or ski-related trams, he says.

The Portland Aerial Tram is the key to OHSU's expansion across the freeway to the South Waterfront District and to the $2 billion of private investment in the district that includes the John Ross, a 32-story condo tower and two other high-rise condos, as well as the new OHSU building, OHSU officials say.

What was a more than 20-minute shuttle ride by van for doctors and other medical personnel is now just 3 minutes and 20 seconds.

The tramway is part of a 20-year OHSU master plan developed in 1999 that indicated the most conducive place for Oregon's only academic health center to expand was the South Waterfront along the Willamette River.

Not that the tramway has come without controversy and caused the Portland City Council more than a few headaches. With initial estimates saying its construction would cost $15 million, the price continued to rise until it hit its current tag of $57 million, 15 percent ($8.5 million) of which will be covered by South Waterfront property taxes. The majority of the cost, about 70.5 percent or $40 million, is being covered by OHSU, with the other 14.5 percent being covered by South Waterfront property owner fees.

Skyrocketing steel, concrete and labor costs are mainly to blame for the almost quadrupling of the tramway's construction price, according to news reports in The Oregonian.

Then there are the Corbett-Terwillinger and Lair Hill neighborhoods below the tramway. Residents have claimed that the tramway is not only an invasion of privacy but will also lower property values.

Residents have been offered rides on the tram before it opens to the public and OHSU has gone out of its way to hear their concerns, says Gerri Lutes, an OHSU spokeswoman. "They've commented that it's pretty quiet," she says.

While the cabins are now filled every five minutes with doctors in white medical coats and blue scrubs, nurses and construction workers, along with some OHSU employees who admit they're riding just for fun now and then, anyone will soon be able to ride for a public fare expected to be $4. The tramway has been built as a "public conveyance," Burnham says.

Two OHSU employees were sent to New York City last year to talk with operators of the Roosevelt Island Tramway, whose only mishap in 30 years came last April when commuters were trapped above the East River for seven hours when the tram, the only commuter aerial tramway in North America used strictly for mass transit, suffered a power failure.

It's really not that complicated, Burnham says, pointing to the cables, or "ropes," as they're called in tram terminology, from the deck at the upper-tram terminal. Each cabin is guided by three ropes, two "travel" ropes with a "haul" rope that runs underneath the travel ropes. The haul rope is the endless looping bi-cable. A 16-wheel carriage sits above each cabin and runs on top of the travel ropes.

"The weight of the car is simply pulling down on those travel ropes," Burnham says.

Two-car tramways like PAT use a "jig-back" system. A large electric motor is located at the bottom of the tramway. As the system pulls one cabin down, that cabin's weight helps pull the other cabin up. Each cabin has a few seats and bars to hang on to but is mostly standing room only. Each cabin holds up to 78 passengers and there's a "run" every five minutes.

The first test runs of PAT were conducted while the cabins were still wrapped in plastic. When members of the Portland media were invited to ride Dec. 14, Oregon was gearing up for one of its biggest windstorms in recent memory, with gusts reaching 100 mph on the coast and 50 mph in the valley. Nonetheless, PAT made a smooth run that day, Lutes says.