PORTLAND, Ore. - While residential real estate prices have turned south in much of the United States, Portland's housing stock continues to appreciate, and by double-digit percentages.

Why? Young families looking for hip, yet livable, places. Retirees following their kids around. Wads of cash inherited from the World War II generation. Tight supplies caused by the planning and zoning restrictions that lead to "livability."

Easy terms for even first-time buyers. Relatively higher prices next door in California.

Explanations from those in the real estate business are abundant, which itself may help to explain the continued rise in prices.

The S&P/Case-Shiller composite index for 20 major markets in the United States released on Tuesday showed homes in Portland, along with its bigger Pacific Northwest neighbor Seattle, posting strong gains, 13.2 percent in Portland, 14.1 in Seattle.

The average among the 20 cities, measuring annual rates through October, was 2.9 percent, and six markets showed declines, including markets as diverse as San Diego and Detroit.

Native Portlanders may be shocked at the valuations on their houses, but the surprise among people looking at the market from the outside is how cheap it is, said real estate agent Charles Turner.

"One of the prime reasons is still California," he said. "The difference between what their dollar buys down there and what their dollar buys up here is huge." That attracts not only buyers, such as retirees, looking to "cash out" of pricey homes in California, but also comparison shoppers in the rest of the country looking all along the West Coast.

Portland's reputation - heavy on brew pubs, bicycling, high tech, outdoor recreation - attracts young people. A 2004 study, titled "The Young and the Restless," by two economic consultants identified Portland as among half a dozen U.S. cities gaining population among young people 25 to 34 years old, key to building high tech and "knowledge-based" businesses.

"I think one word: hip," said broker Francine Corriere. "I really think our Gen Yers want hip."

But they want hip on traditional terms, she said. Coming out of college, grad school or house-sharing with other young people, many are nesters. "They want bungalows," she said. "They want neighborhoods, they want strollers."

Portland's tradition of planning and protecting neighborhoods plays into that demand, she said.

And many young people, she said, come with enough cash to handle expensive houses and payments, from parents of the World War II generation handing down "the largest volume of money that's ever been moved from one generation to the next."

Even those who don't come with lots of cash still find "very easy terms" for buying, said broker Fred Montgomery. "There are actually lenders that will do 100 percent financing," with no down payment, he said. "In some cases, they'll get their closing costs financed also."

Montgomery said the metropolitan economy has come back from a tough recession around the turn of the century, led by high tech and apparel companies. "Nike and Adidas are bringing in the young people," he said.

The state's chief economist, Dae Baek, noted in his recent forecast to legislators getting ready for a session in 2007 that he expects housing prices statewide to continue rising even as the housing industry slows in 2007.

Real estate agents said that's because of the state's land-use planning laws, long known as the toughest in the nation. To protect farmland, they restrict growth to the inside of what's called a city's "urban growth boundary," and a restriction in supply tends to push prices up.

"You can't sprawl outside the urban growth boundary," said broker Charles Turner. "Whether that's good or bad, the price is the inevitable result."

That's not likely to change, despite the state's 2-year-old initiated Measure 37, agents and brokers said. The measure was designed to allow longtime owners of farm and timber lands to develop their property for residential uses despite more recent land-use regulations.

But much of their land lies beyond the reach of city water and sewer systems, broker Eric Garland said, and uncertainty over legal and bureaucratic issues surrounding Measure 37 means "there are so many hurdles a builder and developer has to clear."