Rent-to-Own Gaining Favor Once Again

Rent-to-own options are becoming popular again after falling out of favor during the last couple of decades when mortgages were easy to get.

The advantages of rent-to-own to buyers include a way around poor credit, an opportunity to rebuild credit worthiness and a way to try out homeownership without making a costly commitment.

For sellers, it offers cash flow from properties that might otherwise just be sitting there.

In some parts of the country, like Florida, rent-to-own arrangements are fairly commonplace, but in other parts of the country developers are only beginning to experiment with this form of purchase.

In the Boston area, Economic Development Financing Corp. (EDFC) and Trinity Financial are two affordable-home developers that have introduced experimental rent-to-own programs. Eric Gedstad, spokesman for MassHousing, a state agency that finances housing construction, says his agency is supportive.

“As the lender, we are gratified that the developer has cash coming in. It makes sense for potential homeowners. The more time that goes by the better the opportunity for someone to repair his credit.”

Source: Boston Globe, Robert Preer

Small Homes, Cottages Score Big With Buyers

However, home buyers these days increasingly are interested in smaller homes that consume less energy and encourage interaction among neighbors.

Developers in cities such as Seattle, Boston, and Milwaukee are building cottage developments to meet the rising demand.

Architect Ross Chapin and developer Jim Soules have erected nearly 50 Craftsman-style cottages during the last 10 years in the Seattle area. (Watch Video: Choosing Cottages Over McMansions)

The quirky homes sell for as much as $600,000, despite the fact that they range in size from just 800 square feet to 1,500 square feet.

Chapin uses clever design tricks, such as corner windows and skylights, to give the illusion of more space. He also makes the most of every inch by including crawlspace storage and built-in bookshelves and cubbies.

“These days, we drive to the house, open the garage door, go in,” Indianapolis developer Casey Land told the Wall Street Journal. “But it’s important to get to know your neighbors. I think people miss that.”

Source: Wall Street Journal, Sara Lin (07/18/08..)

Big-City Home Prices Are Faring Well

America’s largest downtowns have become some of the best places to hide during the housing downturn. Here’s a rundown of home-pricing trends in the central core of a sampling of the country’s largest cities:

  • Chicago The city’s prized Gold Coast neighborhood had record sales prices in the last year, but bargains abound in the city’s periphery. In Bronzeville, a gentrifying community, prices have dropped to as low as $85,000. Chicago’s desirable North Shore suburbs are continuing to do well: Prices are up, though sales volume has declined.
  • New York Manhattan neighborhoods like SoHo, the Lower East Side, Greenwich Village and the Upper West Side are all up in the last year. Brooklyn is also holding up well. Meanwhile, sales in New Jersey and Connecticut commuter suburbs are down 8 percent from the peak in mid-2006.
  • Boston Prices in the core part of the city are flat or slightly higher over the past year, though sales are taking longer. However, Condo prices in suburban Brookline, one of the most desirable neighborhoods, are down about 7 percent. City neighborhoods like Jamaica Plain and West Roxbury are up about the same amount.
  • San Francisco Prices are up strongly in the city’s favorite neighborhoods, including the Financial District, Telegraph Hill and Russian Hill. Distant suburbs have weakened. Sales in Alameda and Contra Costa, across San Francisco Bay, are down 18 percent and 27 percent respectively.
  • Los Angeles Without an active downtown residential core, L.A. is an anomaly, Riverside and San Bernardino counties are down sharply. Lower-priced homes in Palm Springs have lost about 24 percent of their value. Less-affluent cities like Ontario and Chino are down between 15 per cent and 31 percent. But prices are up in posh areas like Brentwood, Westwood, and the Hollywood Hills

Source: The Wall Street Journal, Jeff D. Opdyke 05/20/