The Preserving the American Dream conference in Houston this past weekend was a lot of fun, but also pretty exhausting. I’ll have more detailed reports in upcoming posts, but for now here is an article about Houston’s housing market by a Federal Reserve Bank economist.

“Given that Houstonians had access to the same new types of mortgages as the rest of the country and that Houston has had greater population growth than other large metros, we might expect price appreciation to be stronger in Houston than elsewhere,” says the article. “However, the opposite has been true.”

The reason? Houston’s lack of zoning and its large supply of land available for development allowed builders to respond to easy credit by increasing the pace of construction. Slow and unpredictable permitting processes prevented builders in many other regions, including Florida and the Pacific Coast states, from similarly stepping up production.

While some cities and regions have further delayed construction by imposing adequate public facilities or concurrency ordinances, Houston allows developers to create their own municipal utility districts. Through these districts, the developers install the sewer, water, and other facilities needed by their developments and charge the property owners over time.

The result is that housing prices did not bubble, and they are not significantly declining today. As of the fourth quarter of 2007, in fact, they were still increasing. Anecdotal evidence from local realtors and developers indicates that the tightening credit market has soften the demand for homes under $200,000, but homes above that price are still selling well.

Whatever correction Houston faces, says the article, “takes place in the context of prices that are squarely in line with local construction costs and without the painful supply-induced downturn under way in many other markets.” This leaves Houston relatively immune to the ups and downs of housing prices experienced in regions with planning-induced housing shortages.