Home prices continued to gain steam in May according to a closely-watched reading, even as mortgage rates climbed.

The S&P/Case-Shiller home price index was up 12.2% compared to a year ago, slightly better than the 12.1% rise in April. It was the biggest year-over-year jump in prices since March 2006, near the peak of the housing bubble.

Prices in two cities - Dallas and Denver - hit record highs, topping even the peaks they reached during the housing bubble.

However, the national index, which measures prices in the 20 largest markets, is still 24.4% below the peak of June 2006.

Just a year ago, the index posted a 12-month decline in prices. Sellers had been struggling while their homes languished on the market for months, or even years. But prices have increased every month since June 2012, and each month the increase has been greater than the month before.

The gain in home prices has now made this a good time to sell a home. Many sellers are finding themselves in the midst of bidding wars, with buyers eager to make a purchase in a market with a tight supply of houses available for sale. House hunters are also eager to lock in a mortgage while rates are still low, at least by historic standards.

The record low mortgage rates of earlier this year have risen significantly, crimping the purchasing power of potential home buyers. But climbing rates have yet to slow the rapid increase in home prices.

Additionally, prices are being boosted by a sharp drop in foreclosures, which had been holding prices down.

"Home prices continue to strengthen," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. All 20 markets measured in the index have higher prices than they did in April. The housing market's recovery has been an important factor in the nation's overall economic improvement.

Many of the markets with the biggest year-over-year changes in prices are those that were hit hardest by housing's collapse. Prices in San Francisco, Las Vegas, Phoenix and Atlanta are all up more than 20% from a year ago. New York had the most modest rise with a 3.3% increase.

But the rapid price gains over the last year are at a level that no expert thinks can be sustained. Some have even suggested it was unhealthy for the market, raising the risk of a new housing bubble, at least in some regions. The rapid rise of housing prices in the middle of the decade eventually sparked the crisis in the financial markets and the Great Recession.

But Joseph LaVorgna, chief US economist for Deutsche Bank, said he believes prices still have room to increase further, even if their pace slows.

"Affordability remains near historic highs despite the recent rise in rates and home prices," he said. "And the increase in home prices should encourage banks to ease lending standards for mortgages, since the collateral for the underlying loan is appreciating in value."

Portland finalizes two new leases for companies at Maine State Pier

Congress Square Negotiations Begin

Posted by Michael Sosnowski

It wouldn’t be Portland if there wasn’t controversy!  The most current debate is around what to do with the Congress Square Plaza.  Rockbridge Capital, who purchased the Eastland Park hotel in 2011 and is currently in the final stages of a $40 million renovation, is trying to persuade city to sell two-thirds of the plaza.  If this is done, they will build a 9,400 sqft event center as part of the overall project.

The historic 86-year-old hotel is scheduled to reopen in December as the Westin Portland Harborview Hotel.

Public discussion has been going on for months and several conceptual plans have been presented.  As expected (and typical) opposition groups have been vocal, and as a result various plans have been presented by the developers.

For a review of the plaza’s history and potential new design, you can download the report: Congress Square Plaza.

The most recent hurdle to be passed was a meeting of the City Council’s Housing and Community Development Committee at the end of May.  In a 3-1 vote it was decided that the city should move forward with negotiations to sell the park property to Rockbridge Capital.

Prior to this decision, the task force assigned to find solutions to improving the plaza was deadlocked 6-6 as to whether to support the Rockbridge Capital plan.  This led to tweaks in the design and the subsequent HCDC meeting, public review and subsequent 3-1 vote.

Passion on All Sides:

Some comments on the plan, from those in attendance at HCDC meeting include:

• “We need to improve the plaza, not privatize it….”

• The new design was not “substantially different” from previous ones.

• Repurposing the plaza as a true plaza .… does indeed net us less open space, but it unequivocally nets us better open space….

• The event center would “enhance what is happening to Congress Square” …. the event center  proposal would be “a fantastic opportunity that will not happen again anytime soon.”

• “The vast majority of Portlanders will not want to see this park go away….” (really?)

• …. opposing it in favor of improving the existing plaza is the result of a “misconception,” because there are no plans to do so.

Next Steps

Following negotiations (assuming they are successful), a vote will be required by the Portland City Council to approve the sale.  There will still be ample time, however, for more debate – as expected.

After closing unexpectedly in February, the historic Jameson Tavern on Freeport's Main Street is scheduled to reopen this summer under new management.

Tom Hincks, former owner of the Fisherman's Grill in Portland, finalized a new lease for the restaurant on Wednesday. He said he plans to complete some interior renovations and open for business before July 4.

Jack Stiles operated the restaurant for more than 30 years, said Matthew Cardente, who helped broker the lease agreement.

"We're restoring what I remember from back in the day," said Hincks, 46, of Yarmouth, who expressed respect for Stiles and his long run as owner. "I'm just trying to make the old guy proud and make a living."

Stiles did not return calls for comment Wednesday.

Before closing the Jameson Tavern in February, Stiles converted the restaurant's front dining room into a retail space that has been leased to Brahm's Mount, a high-end local textile manufacturer. The lease of the restaurant will not displace Brahm's Mount, Cardente said.

Hincks' lease covers five years with an option after two years to extend the agreement. As long as business is steady, Hincks said, he plans to expand and build a permanent cover over an outdoor patio that is open during the summer.

Cardente, who said he worked at the restaurant years ago, said he is happy that the property will retain its name and identity.

"Everybody who was looking at (the property) either wanted to change the name or do something different," he said.

Built in 1779, the tavern was once an inn. For years, it was said to be the site of the signing of documents declaring Maine's independence from Massachusetts, although that claim now appears dubious.

Hincks said that, in taking over from Stiles, he plans to keep as much of the atmosphere as possible while making aesthetic updates to the space, with new tables and chairs and a refinished bar and floor surface.

Workers have spent three days sanding a thick coat of black lacquer from the decades-old barn boards in the main dining room -- a feature that puzzled Hincks.

"Talk about making a tavern as dark as possible," he said.

While the restaurant's interior will be largely unchanged, the menu will be revamped, with a heavy emphasis on local produce, fish and meats.

Hincks said the only frozen product he plans to use is Maine shrimp, only because of the short duration of the fishing season.

While buying lobsters, clams, crabs and other seafood directly from fishermen takes more time each day than getting it from a traditional food supplier, Hincks said customers in the age of social media and celebrity chefs are increasingly food savvy and willing to return for consistent quality.