This is a list compiled by Archibald employees of some of our favorite places to eat in the area. We would love to hear your suggestions to add to the list.

Portland Restaurant Guide

$- Under $10

$$- $11-$30

$$$- $31-$60

$$$$- Above $61

*Approximate cost per person for a meal including one drink, tax and tip.

Meriwether’s-

2601 NW Vaughn St., Portland, OR 97210, (503) 228-1250

$$$- Local gourmet foods, great happy hour, and breakfast

Genoa-

2832 SE Belmont St., Portland, OR 97214, (503) 238-1464

$$$$ Italian cuisine. 5-course Prix Fixe menu and wine pairing at additional cost.

Ringside Steakhouse

- 2165 W Burnside St. Portland, OR 97210, (503) 223-1513

$$$ Classic steakhouse and seafood. Great happy hour, amazing onion rings.

Café Mingo

- 807 NW 21^st Ave. Portland, OR 97209, (503) 226-4646

$$$ Romantic Italian dinning. Great wine list.

Wildwood

- 1221 NW 21^st Ave. Portland, OR 97209, (503) 248-9663

$$$ American Cuisine. Great service, Fantastic food.

Jo Bar-

701 NW 23^rd Ave, Portland, OR 97210, (503) 222-0048

$$ Casual fare, complete with wood oven fired and spit roasted cuisine. Great Happy hour menu.

Portland City Grill

- 111 5^th Ave. Portland, OR 97204, (503) 450-0030

$$$ Traditional American steakhouse and seafood. Amazing city views. Great happy hour.

Beast

- 5425 NE 30^th Ave., Portland, OR 97211, (503) 841-6968

$$$$ Delicious French inspired cuisine. Chef has been featured on Food Networks” Iron Chef.” Communal seating and reservations required.

Ox-

2225 NE MLK Jr. Blvd. Portland, OR 97212, (503) 284-3366

$$$ Argentinian cuisine. Small laid back atmosphere.

Bamboo-

836 NW 23^rd Ave. Portland, OR 97210, (971) 229-1925

$$$ Sushi, Japanese. Fresh, sustainable, and tasty sushi.

Higgins-

1239 SW Broadway, Portland, OR 97205, (503) 222-9070

$$$ Local, fresh, organic ingredients. A classy French American restaurant.

Heathman-

1001 SW Broadway, Portland, OR 97205, (503) 790-7752

$$$ Featuring Pacific Northwest seasonal ingredients. Inspired by the flavors of French cuisine. Also great for brunch and happy hour.

Laurelwood Brewery

- 5115 NE Sandy Blvd. Portland, OR 97213, (503) 282-0622

$$ Local Brewery with delicious beer, good service and tasty food.

Pix Patisserie

- 2225 E Burnside ST. Portland, OR 97214, (971) 271-7166

$$ Pix specializes in French desserts, and famous for their 30+ macaroon flavors. Connected to Bar Vivant featuring inexpensive tapas, and spirits.

Amalfi’s

- 4703 NE Fremont St. Portland, OR 97213, (503) 284-6747

$$ Legendary for the best pizza in Portland, casual Italian cuisine and tasty cocktails.

Brix Tavern-

1338 NW Hoyt St. Portland, OR 97209, (503) 943-5995

$$ The menu is built around simple American food, using fresh local ingredients. Great happy hour, and all day on Monday.

Esparza’s Tex-Mex Café-

2725 SE Ankeny St. Portland, OR 97214, (503) 234-7909

$$ Extensive menu, excellent value, and great atmosphere.

Clyde Common

- 1014 SW Stark St. Portland, OR 97205, (503) 228-3333

$$ European style tavern serving delicious food and drinks in an energizing space.

Hotel DeLuxe

- 729 SW 15^th Ave. Portland, OR 97205, (888) 628-4406

$$$ The Driftwood Bar is the oldest bar in the city with tons of history and a golden age of Hollywood feel.

Abby’s Table

- 609 SE Ankeny St. Portland, OR 97214, (503) 828-7662

$$ Featuring Ethnic themed family style dinners using local produce. Featuring omnivore and vegan options.

820 The Mint

- 820 N. Russell St. Portland, OR 97227, (503) 284-5518

$$ Sleek inviting space serving vibrant drinks and food.

Sanborn’s-

3200 SE Milwaukie Ave. Portland, OR 97202, (503) 963-8000

$$ Specializing in amazing breakfast dishes, and brunch.

Besaw’s

- 2301 NW Savier St. Portland, OR 97210, (503) 228-2619

$$ Longstanding Portland institution using fresh, local produce and grass feed meat. Best known for its amazing brunch.

The Screen Door-

2337 E Burnside St. Portland, OR 97214, (503) 542-0880

$$ Featuring Southern/Creole cooking. Known to have some of the best fried chicken in Portland.

Hubers

- 411 SW 3rd Ave. Portland, OR 97204, (503) 228-5686

$$. Portland’s oldest restaurant, famous for its Spanish Coffees prepared tableside with flair.

Bombay Cricket Club

- 1925 SE Hawthorn Blvd. Portland, OR 97214, (503) 231-0740

$$ Delicious Indian food, incredible Naan. Reservations recommended.

The Deck

- 2901 NE Marine Dr. Portland, OR 97211, (503) 283-6444

$$ Open seasonally through the summer. On a dock at McCuddy’s Marina. This casual floating restraint is a fun place to grab a bite, and cocktail in the sun on the Columbia River.

Zeppo Italian

- 345 1st St. Ste. 105 Lake Oswego, OR 97034, (503) 675-2726

$$ Great atmosphere with outdoor seating available. Italian cuisine with many options and good portions.

Andy Giegerich Sustainable Business Oregon editor- Portland Business Journal

A new small business study, engineered by two Oregon firms, suggests that entrepreneurs are more driven by the potential for freedom and the chance to work at a job they love than they are by money.

The 2013 State of the Business Owner Report, released by Ashland-based business coaching firm EMyth and based on a methodology designed by Portland-based PixelSpoke, found that money ranks fourth among the reasons that small business owners start new ventures.

The top three reasons:

• They want the freedom to pursue new opportunities.
• They want to follow their personal passion.
• They want to gain their independence.

The report hints that entrepreneurs want more guidance and insight. However, some 85 percent of business owners feel they have a “competitive advantage” over their peers. EMyth’s counselors, as a result, consistently tell clients they need to keep that confidence in check.

The survey queried more than 1,700 business owners, including Shawn Busse, CEO of Portland-based marketing firm Kinesis.

“My business was broken and I didn’t even notice until it was almost too late,” Busse said in a release. The issue, he said, was that the company took on too many project-based clients with the hope of boosting revenue.

“I realized I would never get control by just focusing on revenue,” he said. “I needed a more sustainable business model to weather the economic ups and downs.”

Busse eventually reversed his business’ fortunes by shifting to a retainer-based revenue model.

The business owners responded to the 60-question online survey in early 2013.

Among other findings, the report found that 85 percent of business owners have written company values, and that 70 percent of them use those values to gauge new hires.

However, only 44 percent believe their employees examine those values in their own daily decision making.

PORTLAND, Ore. — Two decades ago, the city of Portland’s Yellow Bike Project put hundreds of canary-colored two-wheelers on the streets for public use. It was an earnest effort, utterly without bashfulness or diffidence. Then human nature took over and the bikes were variously vandalized, stolen or chopped up and sold for parts.

Spring is the season for being outdoors. For many that mean slipping on their rubber boots and gloves, grabbing their shovel, and planting seeds in the hope of an ample garden in the near future. While preparing your plot, it’s important to take steps to ensure that it’s safe for your pets to enjoy as well.

“When planting your garden it is important to note that there are numerous house and garden plants which can be toxic to animals,” said James Barr, Assistant Professor at the Texas A&M University College of Veterinary Medicine & Biomedical Sciences. “Some include brunfelsia, oleander, and even lilies.”

Brunfelsia, also known as the “yesterday, today & tomorrow” plant, causes convulsive seizures in dogs, while cycads, low growing palm trees used indoors and outdoors, are toxic to the liver of dogs and they trend to chew on the roots.

“When the liver is contaminated, the dog’s body stops producing the normal clotting factors and the dog starts bleeding excessively. This can progress to the point where the dog bleeds to death,” said Barr.

While brunfelsia and cycads have not been known to cause problems in cats, lilies are especially harmful to them. Once ingested, cats develop symptoms such as nausea, vomiting, depression, and will stop eating altogether.

“Once ingested, the cat must be treated by a veterinarian, preferably within 24 hours and not later than 48 hours,” said Barr. “The toxin(s) present in the lilies are very toxic to the kidneys.”

Kolanchoe is a house plant that is known to be toxic. It contains a chemical which is similar to the human heart medication, digoxin.

“The garden plant oleander also contains digoxin-like compounds. Both kolanchoe and oleander can be toxic to all animals, including dogs and cats, if ingested,” said Barr.

Spring is a great time to enjoy the outdoors. Taking the time to make sure that everything you put in your yard is safe for your pet will ensure this time is special for the entire family.

By Angela Moon

NEW YORK (Reuters) – With the Dow and the S&P 500 setting another string of record closing highs this week, the old Wall Street adage “Sell in May and Go Away” is starting to look weak.

Closing out the second week of May, the Standard & Poor’s 500 index is up 2.3 percent for the month.

For the year, the benchmark S&P 500 is up a stunning 14.6 percent.

Some analysts say that when the market starts off this strong, it tends to keep the upward momentum going until the end of the year.

“Instead of ‘Sell in May and Go Away,’ we may be setting up for a surprise May rally,” said Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research in Cincinnati, Ohio.

“What’s encouraging is that small-cap stocks have been outperforming the market recently. It’s a sign that the market is going for even the riskiest sectors.”

Both the Dow industrials and the S&P 500 topped major milestones for the first time in early May, with the Dow Jones industrial average <.dji> surpassing 15,000 and the S&P 500 <.spx> breaking through the 1,600 mark. Since then, the indexes have been steadily holding above the landmark levels. The Nasdaq Composite Index <.ixic> has climbed to the highest closing levels in 12-1/2 years.

In a sign of the rally’s breadth, the Russell 2000 index <.toy> of mid- and small-cap stocks also hit all-time highs recently.

Technical analysts say the next level to watch would be 1,660 on the S&P 500.

“The main question is whether the bulls can maintain the 1,600 level on the S&P 500 for another week,” said Ari Wald, technical analyst at PrinceRidge Group, a New York-based investment bank.

“If it does, the next level is 1,660. But with markets already this high, it won’t be easy.”

Despite lingering concerns about a technical pullback, the market’s strong performance so far this year has also increased the chances of equities rallying throughout the year, according to some analysts.

“With the market up so much, can it continue to make gains over the next seven months through year end? At least based on history, it has a better chance of continuing higher during strong years than when it is not up significantly,” Bespoke Investment Group analysts wrote in a note to clients.

Bespoke noted that this year is only the 11th-best start to a year since 1991, when the index gained another 9.7 percent for the rest of the year.

If 2013 plays out like that – with another 9.7 percent gain in store for the S&P 500 – the broad index would finish the year up a whopping 24.3 percent.

LAGGARDS PLAY CATCH-UP

Among recent gainers, sectors closely tied to economic growth such as technology and financial stocks have been catching up after lagging for most of the year.

“We are seeing the once beaten-down stocks making a comeback,” Wald said. “It’s been sort of a rotation of leadership that has been taking place for a month or so. It will be interesting to see if this can last” into next week.

The S&P financial sector index <.spsy> is up about 2 percent for the month, while the S&P information technology sector <.splrct> is up about 3 percent.

For some perspective, the tech sector has a way to go, when compared with defensive sectors like utilities. The S&P utility sector index <.splrcu> is up more than 13 percent for the year, while the S&P info tech sector index is up less than 8 percent.

CONSUMER IN THE DRIVER’S SEAT

The American consumer will get Wall Street’s attention next week when a raft of economic data and retailers’ earnings could shed some light on whether they shopped for more than just the bare necessities.

Retail sales for April will be released on Monday by the U.S. Commerce Department.

“It (retail sales) will be a chance to look at the real picture after weak numbers last month on sequestration and other (external) factors,” said Karyn Cavanaugh, market strategist at ING U.S. Investment Management in New York.

“The market is driven by good fundamentals from corporate earnings, but it’s really the consumers that take up 70 percent of our economy. They are a real game changer.”

Other economic data on tap includes April import and export prices on Tuesday, followed on Wednesday by the U.S. Producer Price Index for April, the Empire State Index for May, industrial production and capacity utilization for April, and the National Association of Home Builders Index for May.

On Thursday, the economic agenda includes the U.S. Consumer Price index for April, housing starts for April, weekly jobless claims and the Philadelphia Fed’s survey for May.

Wall Street will get a look at consumer sentiment on Friday, when the Thomson Reuters/University of Michigan Surveys of Consumers will release its preliminary reading for May.

On the earnings front, a number of retailers are scheduled to report results, including Macy’s Inc on Wednesday. Results from J.C. Penney Co Inc , Nordstrom Inc , Kohl’s Corp and Wal-Mart are expected on Thursday.

With 89 percent of the S&P 500 companies having reported earnings so far, 66.7 percent have topped profit expectations, above the average of 63 percent since 1994. However, only 46.4 percent have beaten revenue expectations, well under the average of 62 percent since 2002.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: angela.moon(at)thomsonreuters.com)

(Editing by Jan Paschal

Think having a beautiful backyard and a dog are diametrically opposed? Think again. We spoke with Stephen Westcott-Gratton, senior horticultural editor at Canadian Gardening, who had much to say on the subject, especially since recently celebrating his English Springer Spaniel puppy Worcester’s first birthday. Both dog and garden are thriving.

Training a puppy to behave well in a garden was actually easier than Westcott-Gratton expected, which was a relief to all concerned.

“It’s kind of like having young kids,” he says. “You have to train your dog the same way you train your children never to put anything in their mouths.” Save for a few exceptions when this doesn’t work (Worcester just can’t stay away from Westcott-Gratton’s maple keys), educating your pup is the best way to protect both your dog from your garden, and your garden from the dog.

PATCHY PROBLEM

For many gardeners, a rippling, emerald-green swath of lawn is the showpiece of their horticultural expertise. Much tearing of hair and wails of lamentation are spent over the discovery of a blemish in this perfection. But Fido has to “go” somewhere.

Heavily fertilized lawns are already receiving near-maximum levels of nitrogen (nitrogen is good for grasses in the correct dosage, hence it’s presence in fertilizer and the lush ring that often surrounds urine-burnt patches). Avoid over-fertilizing to protect your lawn from the additional nitrogen in your dog’s urine pushing it past the tipping point.

To avoid brown patches throughout the lawn, train (or retrain) your dog to go in a specified area. This isn’t difficult to do, but will require supervised bathroom breaks until your dog is reliably choosing to relieve himself in the desired area. Consider planting a hardy, urine-resistant ground covering, such as clover, in the designated potty area, and concealing it with shrubs or taller ornamental grasses to make a screen, or reseed with a more pee-proof variety of grass, such as perennial ryegrasses and fescues.

Other solutions include immediately watering the spot to dilute the urine or employing a kid- and pet-safe product such as Dogonit (marshallpet.com) that rejuvenates existing burnt-out spots. Sprinkling lime or gypsum in the affected area speeds up the recovery of existing grass, or new growth if you’ve reseeded, by neutralizing the acidity of the affected area. Encouraging your dog to drink more will help dilute the urine and decrease the risk of lawn burn.

The notion that it is just female dogs’ urine that causes the burnt-out patches in the lawn is a myth. Both male and female dogs’ urine will create brown or yellow patches due to the high nitrogen content in their urine. Our guess is this myth got off the ground, so to speak, because female dogs squat to pee, concentrating their urine in one place, while male dogs tend to lift a leg in a number of locations, spreading around the damage.

PICK YOUR PLANTS

Westcott-Gratton’s first thought when he brought Worcester home was, “God help the garden.” Then he realized he had to worry about his pup’s well-being as well. Many garden plants can be toxic to dogs, so if your pup is prone to eating everything he encounters (Labrador owners: take heed!), there are certain plants you’d do well to avoid.

When it comes to flowers, this list includes foxgloves, lily of the valley, and pretty much anything in the buttercup family, such as hellebores, columbines, and delphiniums. The safest flowers are the ones that are completely edible and which you can use in your own salads and dishes (bonus!). These include violets, pansies, and roses, as well as flowers from vegetables like squash. The signet marigold is one of Westcott-Gratton’s favourite annuals. One of the most famous varieties is called “Lemon Gem” for its lemon colour and delicious lemon flavour.

A vegetable garden is rewarding and yields bounty that can be enjoyed by both you and your dog (see page 76). A fence is often useful to protect this area, especially at the delicate seedling stage. The foliage of fruits and vegetables in the nightshade family, such as tomatoes, potatoes, and eggplants, is toxic, but most dogs will avoid these.

Culinary herbs like parsley, oregano, sage, thyme, mint, and rosemary are all safe for dogs. Apart from not being toxic, they also pack a strong taste, so Fido will unlikely bother them. Aromatics such as lavender are also a great choice.

A strawberry patch, apple trees, and raspberry canes are all marvelous dog-friendly additions to your garden. Dogs can learn to pick berries or other fruit if they acquire a taste for it, so don’t be surprised if your harvest below “dog height” is negligible.

For a list of frequently encountered toxic plants, go to aspca.org/toxic.

If your dog continues to get into your flower beds, consider raised beds, decorative stands, or hanging baskets. Motto: work smarter, not harder.

THE DIGGING DILEMMA

Dogs dig. So what do you do when you dig your dog, but you don’t dig your dog’s digging? To discourage Digger from excavating your flower bed and tunneling through your tomatoes, consider creating a space in your yard designed specifically for “paws-on activity.” A shaded sandbox or sand pit is a great idea, particularly as many dogs love to dig out a cool space to lie in during the warmer months. Situate it at the base of a tree or surround it by low shrubs, and consider adding a layer of wood chips.

low shrubs, and consider adding a layer of wood chips. “A lot of animals like [wood chips] because they keep everything quite fluffy and light up top and it’s easier for them to dig and bury than solid earth,” according to Westcott-Gratton. Giving Digger a place of his own for his hobby may ensure that you harvest spuds from your potato patch and not a basketful of buried chew toys.

CHEMICAL-FREE FOR YOU & ME

Little Fluffy spends a lot of her time outdoors with her eyes, nose, mouth, and skin in contact with the greenery and soil, so make sure that your gardening products are not toxic. While many states and provinces have banned pesticide use, this is not the case everywhere. Take a careful look at what you’re spreading on your lawn and garden and avoid any chemical herbicides or pesticides.

“If you have an animal that is in your yard, you really have to…be strictly organic,” according to Westcott-Gratton. There are no traditional chemical pesticides, herbicides, or fungicides that are not potentially harmful to your pet. Need convincing? A study by Purdue University veterinary researchers found exposure to herbicide-treated lawns and gardens increased the risk of bladder cancer by four to seven times in Scottish Terriers. The study adds to earlier research conducted by the National Institutes of Health that found elevated rates of canine lymphoma in dogs exposed to lawn pesticides. The level of risk corresponded directly with exposure to these chemicals: the greater the exposure, the higher the risk.

If your garden requires some extra protection against bugs, choose organic products such as copper sulfate or Bordeaux mixture, a blend of copper sulfate and slaked lime used to control fungus and downy mildew. These are safe for dogs, even if ingested. Westcott-Gratton suggests choosing plants that naturally require less in the way of chemical pest protection. Roses, for example, are highly susceptible to pests, so either be prepared with organic people- and pet-friendly Safer insecticidal soap or choose something else to plant.

SHADY LADY

Strategic planting of trees and bushes to create shady space in your yard will not only add beauty and interest but will provide your dog with a place to rest and cool off from the heat. Lady will also enjoy playing “cave dweller” under the low-hanging boughs.

GROUND PATROL

Many dogs like to patrol the perimeter of their property to guard against intruders such as cats and marauding squirrels. Unfortunately, this behaviour can wear paths in your grass/ground covering. If your dog sees himself as an extra in Stalag 17, instead of attempting to force a changing of the guard, consider creating a pretty, meandering, perimeter-mapping pathway covered with mulch and contained with lawn edging or a rock-work border.

Potential Danger: Sweet-smelling but potentially harmful cocoa bean mulch

Cocoa mulch, made of cocoa bean shells, is a by-product of chocolate production. It is commonly used in landscaping, but pet parents would do best to use an alternative mulch; if eaten in large quantities, cocoa mulch can be toxic to pets.

“Dogs are attracted to the fertilizer’s sweet smell,” says Dr. Steven Hansen, ASPCA Senior Vice President of Animal Health Services, “but like chocolate, cocoa bean mulch can be too much for our canine companions.”

The ASPCA notes that, “Ingestion of large amounts of cocoa bean mulch, which contains residual amounts of theobromine—a methylxanthine found in chocolate and known to be toxic to dogs—may cause a variety of clinical signs. These typically start with vomiting, diarrhea and elevated heart rate, and if large amounts are consumed, they may progress to hyperactivity, muscle tremors and possibly other more serious neurological signs.”

“We advise pet parents not to use cocoa mulch in areas where dogs can be exposed unobserved, particularly dogs who have indiscriminate eating habits,” says Dr. Hansen. Use instead a nontoxic alternative, such as shredded pine, cedar or hemlock bark.

WATER FEATURES

“If everybody had an ocean….” sing those quintessential boys of summer, the Beach Boys. While Buddy might not be into surfing (yet!), he, like many dogs, may love to wade, play, and cool off in an outdoor water source. When adding a pond or fountain, make it dog-friendly by keeping the water clean and fresh (a pump is often essential; stagnant water breeds mosquitoes), and, of course, chemical free. The water must be drinkable, and it needs to be shallow enough for Buddy to safely enter and exit.

RUN, FORREST, RUN!

Like Forrest Gump, most dogs enjoy a good tear-away once in a while. It’s a way of expressing exuberance, working off energy, blowing off steam, and, yes, escaping bullies. However, flying feet coupled with sudden stops and turns can wreak havoc on sod. For your Forrest’s racetrack, there are several kinds of grasses that are easy to care for. A good choice is old Kentucky bluegrass, which doesn’t need to be mowed or fertilized and once it’s established you don’t really have to water it. Then when your dog wants to break the sound barrier, you can sit back with a mint julep and a stopwatch and enjoy the show.

DOGWOOD DREAMS

Having a space where flowers, plants, and a dog share a common space does require some consideration, planning, and time, but it is definitely worth it. As Westcott-Gratton puts it, “It’s a lifestyle choice. The two go hand in hand.” You and your dog can share an outdoor Eden replete with colours, tastes, scents, sounds, and textures to nourish and delight both your souls.

Modern Dog Magazine

By Olivia Zauli Fellows

As Congress looks for ways to close the growing deficit and curb spending, the mortgage interest deduction could be on the chopping block, and with good reason: it’s one of the largest expenditures in the tax code. But some worry taking it off the table will slow the housing market recovery and have long-term economic consequences.

“We are in the midst of a housing recovery that is still very fragile,” says Nicolas Retsinas, senior lecturer in real estate at the Harvard Business School. “Any withdraw of a subsidy or incentive runs the risk of jeopardizing the recovery, but given the size and impact of the deduction and the focus of it and Washington’s budget reform it’s hard to believe it’s not being looked at. There are too many commas involved for lawmakers not to look at it.”

Earlier this week, the nonpartisan congressional Joint Committee on Taxation released its report of potential tax reform measures and real estate played a central role, making it likely lawmakers will revamp the mortgage interest rate deduction.

House Ways and Means Committee Chairman Dave Camp, (R-Mich,) is spearheading the effort to simplify the tax code, already holding 20 committee hearings with the most recent focusing on the mortgage interest deduction.  

Lawmakers are treading lightly with this politically-sensitive issue; after all, it’s been around since 1913 and homeowners have gotten used to the hefty deduction.

The Joint Committee on Taxation estimates that 34 million households claimed the home mortgage deduction in 2012, costing the federal government $68 billion in revenue. However, those taking advantage of the deduction skews heavily toward taxpayers along the East and West coasts, according to a recent report from The Pew Charitable Trusts. Homeowners in Maryland claim the deduction at a rate of 37%, with residents in West Virginia and North Dakota at the other end of the spectrum with just 15% taking it.

Different proposals have been put forth on how to reform the deduction, including lowering the $1 million ceiling on the amount of loan that can be deducted, not making it eligible for second homes and transforming the deduction into a credit.

President Obama has proposed restricting the deduction and other tax breaks to the value they would have in the 28% bracket.

No matter what Congress decides to do with the deduction, experts agree that any change needs to be done slowly.  

“There is an expectation that if Congress just does a little bit today with the deduction,” says Jerry Hanweck, professor of finance in George Mason’s School of Management. He noted that when Congress got rid of the ability to deduct interest on consumer loans,  “they did it a little bit at a time, and people thought,  ‘well that’s not going to be the end of it’ and they cut back in spending, because of losing the tax advantage.”

How the deduction is modified will impact the housing market and economy as well as the geographical distribution of the benefit.

Impact on Home Prices

Patrick Newport, director of long term forecasting at IHS Global Insight, says eliminating the deduction would cause home prices to decrease slightly, especially in markets with high home prices. “Cities with higher-income people and home prices, like Boston or San Francisco, would see bigger price decreases than those in say, South Dakota. Prices in cities would drop more than those in rural areas.”

Hanweck adds that buyers are more likely to buy smaller, less expensive homes without the credit. “They are going to want to put more money down because they are going to want smaller mortgage payments.”

Housing-Market Impact  

Since the deduction is more appealing to wealthier taxpayers, getting rid of it would hurt the higher-end and luxury home market, according to Ted Gayer, senior fellow of Economic Studies at the Brookings Institution.

“The deduction is structured now to overwhelming target the wealthier and people getting big loans. Without it, you would see more support of median and lower-income homeowners and would see more construction of these type homes.”

The composition of the market could also shift to more renters than owners. Not having the deduction to rely on could delay consumers to make the leap to become homebuyers.

“There are many psychological decisions that go into deciding to buy a home,” Retsinas explains. “Our research shows that even people who don’t take the deduction consider it important and consumers will use not having the deduction as part of their reasoning not to buy a home. “

Economic Consequences

Experts agree that home ownership could tick down without the deduction, but they disagree on how much it would hurt the economy.

Retsinas says home ownership helps create a stable workforce which is vital to a thriving economy and that every country around the world supports some type of home ownership, though not necessarily through a deduction. “Where we went wrong is that we forgot homes are to be lived in, not to buy and sell and use like cash.”

Hanweck worries that without the benefit the nation’s GDP could decrease by one percentage point over the next two to three years since housing activity, which makes up a large portion of economic growth, will likely slow. However, he says eventually construction of new rental units and smaller homes could offset the decline.

Homeowners would have less discretionary spending without the deduction which could also impact economic growth. “People who bought big houses would see a substantial decrease in discretionary funds, and just like when the payroll tax was reinstituted at the start of the year, we will see consumers slowing their spending and saving more.”

by Kathryn Buschman Vasel

Published May 10, 2013

FOXBusiness 

Read more: http://www.foxbusiness.com/personal-finance/2013/05/10/what-if-mortgage-rate-reduction-is-eliminated/#ixzz2SusOjU85