Mortgage Rates in Houston

							Housing Starts
New home construction has contracted sharply as credit has tightened.


                                                   Housing Starts
                                            Houston-Galveston-Brazoria CMSA 1983-2006

                      80

                      70

                      60

                      50
             Units (000)




                      40

                      30

                      20

                      10

                           0
                              3
                              4
                              5
                              6
                              7
                              8
                              9
                              0
                              1
                              2
                              3
                              4
                              5
                              6
                              7
                              8
                                                                               9
                                                                               0


                                                                               2
                                                                               3


                                                                                          5


                                                                                                7
                                                                            '01




                                                                                        '04


                                                                                        '06
                           '8


                           '8


                           '8
                           '8


                           '9


                           '9




                           '9


                           '9




                                                                            '0


                                                                            '0




                                                                                        '0


                                                                                              '0
                           '8


                           '8




                           '8


                           '9


                           '9
                           '9


                           '9


                           '9
                                                                            '9




                                                                            '0
                                                      Single-Family   Multi-Family

                           Source: CD S Market Research, Apr 2008
                                                             Data
•   Low interest rates pushed single-family starts in the Harris and the adjoining seven counties
    to 34,311 units in ‘01, surpassing the previous record of 33,300 set in ‘83. Starts in ’02
    eclipsed the ’01 total, rising to 34,640 as mortgage rates continued to decline. With
    sustained low rates over the next four years, single-family starts spiraled to 41,995 in ’03,
    45,039 in ’04, 51,085 in ’05 and 55,063 in ’06.
•   Single-family home starts in ‘06 set a record, exceeding most forecasts because of
    continued low mortgage rates, job growth at more than twice the national pace and
    aggressive subprime lending. With tighter lending standards, CDS Market Research tallied
    just 42,028 starts in ’07. Metrostudy anticipates a further decline to 35,000 or fewer in ’08,
    the bulk of the falloff occurring in the under-$175,000 range.
•   Corporate relocations from areas with much higher housing prices are helping to sustain the
    upper end of Houston’s new home market. The lower end in particular has been aided not
    only by historically low mortgage rates that have enabled many renters to become first-time
    homeowners, but also by creative and aggressive efforts to qualify households of
    sometimes marginal creditworthiness — a practice that has now been abandoned.
•   CDS Market Research puts ‘07 multi-family starts at 21,134, the highest level since ‘83. CB
    Richard Ellis reports that 9,630 units were completed in ’07, and that the number of leased
    units grew by 5,826. The firm expects another 14,418 units, of which 14 percent are
    affordable or senior housing, to be completed in ’08. Year-end occupancy stood at 87.4
    percent, down 1.7 percentage points on the year. Apartment occupancy is bolstered by the
    steady rise in single-family foreclosures.




Partnership Research                                                                           Updated 6/11/2008