Mortgage interest rates are low right now, but don't expect that to last. When the government quits buying mortgage-backed securities, rates will head up and away.

Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, explained why mortgage rates were so low at the end of 2009.

"First, the global consensus among bondholders appeared to be that inflation will remain low in the United States for an extended period. This caused the ten-year U.S. Treasury rate to fall to between 3.2 and 3.6 percent for much of the second half of 2009."

With extraordinary levels of federal deficit spending, Dotzour said it is unlikely that the low-inflation scenario will be popular when the economy starts to rebound. Consumers should expect mortgage rates to rise when signs of improvement appear.

A second factor contributing to the low mortgage rates is the Federal Reserve Bank's unprecedented purchase of nearly all the mortgage-backed securities issued by Fannie Mae and Freddie Mac in 2009, he said. Totaling more than $1 trillion for the year, this program has been extended through the end of March 2010.

"The Fed has never done this before in its history," said Dotzour. "They are doing this to stimulate the economy by keeping mortgage rates as low as possible. When the Fed stops buying these securities from Fannie and Freddie, mortgage rates are likely to increase, possibly quite abruptly."

How far will rates go up when the Fed terminates its buying program? Dotzour said that question is difficult to answer precisely, because this has never been done before. But many experts think that rates could move up one-half to one percent.

"The combination of extraordinarily low mortgage rates and current price levels are making homes extremely affordable to American families. In fact, national and Texas housing affordability indices indicate that homes are more affordable than ever. But this will not last. When the economy recovers and the Fed stops purchasing mortgages, rates will rise."

Source: Real Estate Center at Texas A&M University

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At the recent Bryan-College Station Chamber of Commerce 2010 Economic Outlook Conference, state Commissioner of Agriculture Todd Staples reported that that the state's economy is stabilizing.

During his keynote address Commissioner Staples said Texas is doing better than much of the rest of the nation. He attributed it to three things: relatively low taxes with no state income tax, an honorable courts system and a predictable regulatory environment.

He said the nation is at a critical point in history, and an expected population boom could strain state resources. The biggest challenge, he said, will be ensuring that Texas has enough water for the 40 million people expected to be in the state by 2050.

"Each of us, if we want a country and a state we can be proud of, we need to practice the principles of personal integrity," Staples said.

Agriculture will play a large part in the strength of the economy and the state, he said, adding one in seven Texans work in some form of agriculture. Staples said residents should work to ensure that we don't become dependent on foreign food.

Source: Bryan/College Station Eagle

A recent analysis of the best and worst markets for new-home construction found that Texas cities occupy the top five positions nationally.

BuilderOnline, in conjunction with Hanley Wood Market Intelligence, earlier this year debuted its metric for determining markets with the best and least potential. Houston came in at No. 1, with Austin second, Fort Worth third, San Antonio fourth, and Dallas fifth.

Sources: Texas Association of Realtors, BuilderOnline.com

More people chose to settle deep in the heart of Texas than anywhere in the United States in 2009, according to Allied Van Lines' 42nd Annual Magnet States Report. For the fifth year in a row, Texas was the No. 1 destination state based on Allied's report, which tracks U.S. migration patterns and tabulates net relocation gains for each state on an annual basis.

"Texas seems to be the cheap seats but with a great view," says Bill Jones, chairman of the Texas Association of Realtors.

"Just 20 years ago, our wonderful state wasn't the first choice for many people. But now folks from all over are noticing we have everything you could possibly want – from reasonably priced housing, to plenty of land for business and housing development, to a wide variety of fine arts and recreational opportunities."

Source: Texas Association of Realtors

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