IN THE WAKE of 2007’s sub-prime mortgage-lending mess, reading the morning paper has become a bit of a Chicken Little experience. You can hardly make it through your first sip of coffee before encountering yet another article deploring the fact that 1.6 million mortgage holders defaulted on home loans in 2007, and that at least as many are expected to do the same in 2008. By the time you reach the news that U.S. banks reported a loss of almost $40 billion in 2007 thanks in large part to those unpaid loans, your brain has become as scrambled as your eggs.

But the sky is far from falling in Oregon. In fact, in 2007, little more than 1 percent of our existing home loans were in foreclosure or seriously delinquent, giving us the second-lowest foreclosure rate in the country behind Alaska. (Compare this with Michigan, where the foreclosure rate was nearly 6 percent.) And in February the Economist reported that Portland was one of only three U.S. cities—we were joined by Seattle and Charlotte, North Carolina—where housing prices actually increased in 2007. While we saw a 6.3 percent increase, the rest of the country, alas, saw a collective drop in property values of 8.9 percent.

But Oregon boosters shouldn’t break out the mimosas just yet. After all, the Beaver State has typically been late to register real estate tides, according to state economist Tom Potiowsky. It can take 12 months for ripples in the national housing market to make their way here, which means it’s entirely possible that we’ll get our own little soaking later this year. Fortunately, says Potiowsky, we’ll likely be spared the deep shocks affecting much of the rest of the nation, in part because of our long history of slow, steady growth.

That’s right: Portland hasn’t seen a decline in housing prices since the mid-1980s, and our average annual increase is typically under 10 percent. As a result, even if our market does stumble, we won’t have nearly as far to fall as a place like California, where double-digit annual price increases have been replaced by similar decreases. It seems clear that in this leg of the real estate race, it pays to be the tortoise.

So just what has kept the Oregon skies a bluebird shade while the rest of the country clouded over? For one thing, those sub-prime loans that garnered much attention in 2007 made up only 10.5 percent of our state’s total home-loan business last year, while nationally, they constituted 14 percent. That’s because Oregon has a history of conservative lending practices, says Gerard Mildner, director of Portland State University’s Center for Real Estate. Couple that with a well-educated populace (more than half of us have at least a college degree) and a moderate poverty rate (roughly 12 percent, on par with the national average), and it’s easy to understand why we’re less susceptible to the so-called “1-800” loans and the sales spiels of predatory lenders.

Portland can also thank Asia for our relative isolation from the housing market crash. Much of the state’s export business is heavily oriented toward the Far East, where economies have never been more robust—something that’s helped boost local industry despite the recent decline of Oregon’s wood and steel sectors. And a healthy economy, of course, stimulates a healthy housing market. So Portland is much better off than a city like, say, Detroit, where a nearly century-long dependence on the now-crumbling auto industry has left the Motor City and its real estate market in shambles.

Our city’s continuing appeal to the much-touted “creative class” is another factor that’s helping to insulate P-town. Those clever professionals moving here in droves are doing more than just designing the sneakers and computer chips that keep our companies in the black; they’re forming the foundation of our housing market. “They are driving the market from the bottom up,” says Les Spitzer, a private mortgage lender with Wells Fargo Bank. With home mortgage interest rates in Oregon still hovering around only 6 percent—historically a fairly low rate for us—there are still plenty of first-time buyers looking for a place to plug in their espresso makers, even as home prices climb. In fact, Wells Fargo saw a 300 percent jump in loan applications in the Portland-metro area in January, says David Botieff, a Wells Fargo Home Mortgage branch manager.

That means, though, that competition for starter homes that cost about $290,000 (the city’s median home price) is still pretty stiff. And it’s not as though Portland is exactly the most affordable city to begin with: Our median home price is 33 percent above the national median, while our median salary is nearly 9 percent lower than the rest of the U.S. “For a family that’s making $50,000 or $60,000 year,” says Joel Burslem, a Portland real estate marketing consultant who runs www.futureofrealestatemarketing.com, “$300,000 for a house is a huge stretch.”

Tell us about it, say Luke and Angelina Fitzgerald. When the twentysomething couple moved here from New Orleans last November, they discovered that finding a three-bedroom home within their budget of $275,000 just wasn’t realistic—at least, not a place that wasn’t in the suburbs or in need of serious renovations. “We’re going to have to compromise on our budget or our wish list, or both,” says Luke.

For now, the couple is renting a one-bedroom apartment downtown for $1,200 a month while they roll the real estate dice. “If we wait too long, the interest rates might go up,” Luke says. “But if we buy now, we might be paying more than we would in six months.” The Fitzgeralds’ dilemma pretty much sums up the bottom line for buyers in 2008: With interest rates relatively low and the number of homes on the market high, now is a good time to buy, if you can afford the market.

But for sellers, the news is more lukewarm. Stricter lending criteria—like requiring higher credit scores—threaten to shrink the pool of potential first-time buyers, and uncertainty about the economy has already had a bit of a chilling effect on the housing market: Last year, Portland homes spent an average of 43 days on the market; now it’s up to 58, indicating that more people are taking the wait-and-see approach. Despite Congress’s February vote for a $168 billion economic stimulus package, Goldman Sachs still predicts that the country will likely be in a recession by the second or third quarters of 2008.

With such gloom on the horizon, it’s easy to get caught up in the “sky is falling” chorus. But to do so in Oregon right now would be to sing off-key. So far this year our home prices have held steady. And with a projected 17,000 new jobs coming to Oregon, unemployment should stay at 5 percent, according to the state employment economist Art Ayre. “We’re not immune to what’s happening with the national economy,” says state economist Potiowsky. “But where others are going to require major surgery, we’re probably just going to need aspirin.” And maybe the occasional bloody mary to go along with that morning paper.