LOCAL ECONOMY: Houston entered the recession late, but looks like it may recover more quickly. Our recovery is tied more to the world economic recovery and the demand for energy than the national economy. Growing energy demand will help spur Houston’s recovery.

COMMERCIAL PROPERTY VALUES: Overall, commercial property values will continue to be depressed as a result of slow economic activity. However, values of investment-grade “trophy properties” will continue to be strong due to high investor demand for product.

LENDING: Real estate lending will continue to be a major challenge. Higher equity requirements and underwriting standards, especially for residential land development, will suppress delivery of supply. Prices of residential lots can be expected to increase as delivery of new lots will not keep up with new home demand.