This week compared to last year this same week, there is some positive news as reported by Alamo Title in their weekly email update:  Alamo Title's Market News Bulletin for Dec. 6, 2010 - Current Active Listings = 10,331. (http://www.alamotitle-austin.com/)

The Austin Area Market:
-  The number of active listings are up 2.74% from last year during the same week.

-  New listings are down 15.54% this week compared to the same week last year.

-  Pendings are up this week 10.78%.-  Sold residential units are up 1.34% compared to the same week last year.

 The best news I see here.... New Listings are down 15.54% and Pendings are up 10.78%.  I see this as a breather in a market where throughout the year to the end of the summer inventory numbers kept climbing and did begin to come down until after August.  We were at the highest inventory of homes with over 13,000 residential properties on the market.  I can hear Florida markets laughing at this compared what they have been dealing with, as well as Nevada.  We have been relatively fortunate, but this has been a slow developing year after the home buyer tax credits ended this spring.

...we had 10,055 active listings during the same week in 2009.. Today there is 10,331 active listings!  That is 2.74% increase from last year. 

The inventory should continue to look stable compared to last year, but I expect Pendings and Sales through the months leading to May 2011 will look very low compared to 2010 because of the run up caused by the tax credit this year.

With this market environment as a backdrop, leases are doing very well.  Since my last blog I have been digging into the Multiple Listing Service database to isolate some graphs that might depict the situation.

Investor Scenarios: 1 Story, 1500 - 2000 Square Feet, 3 Bedroom, 2 Full Bath, 2-Car Garage

If you had bought such a home in selected areas of Austin, Round Rock, Cedar Park, or Pflugerville, here are some graphical presentations of what the average sold prices and lease rates did during that time period.

Graphs by George Mora, REALTOR(R), Realty Austin

(Austin Board of REALTORS(R) deems the Multiple Listing Service data to be accurate but it is not guaranteed)

Let me know if you would like a copy of one of these and I would be happy to send it to you.  The lighter color is the sold values and the darker color is the leased values, over an eleven year period starting in 2000.  These are for 3 bedroom, 2 full bath, and 2 car garage single-family residences with 1500 to 2000 Square Feet. only.  Each graph represents an geographical area: NW = Northwest Austin, N = North Austin, CLS = Cedar Park south, nearest Austin, and RRW = Round Rock west of I35.

Bear in mind that the year 2000 was a peak year in real estate just before the internet boom went bust, bringing down values for a couple of years.  Still, values stayed fairly stable while leases took a dip and continued to recover.

If you would have bought a house in NW Austin in 2000 for $140,000, and leased it throughout these eleven years, it would now be worth somewhere approaching $180,000 (depending on the maintenance program).  To be conservative, let's say it is now worth $160,000.

Certainly, if such an investor would have put 25% or $30,000, down when purchasing at an investor mortgage rate of 7% on a $110,000 loan, the current loan balance would be approximately $92,000.  Your tenants over that period of time would have paid down $18,000 of the mortgage, while the value would have gone up 10 - 15% or more. (http://www.freemortgagecalculator.net/)

At this time when mortgage rates are lower and prices are more negotiatable, with well qualified tenants snatching up the leases quickly, the next ten years looks at least equally good for the single-family house investor.