BOSTON (MainStreet) -- During a speech this month before the National Association of Homebuilders, Fed Chairman Ben Bernanke shared his views on ways to escape the nation's foreclosure crisis. Among the ideas in that speech (as well as in a report to Congress in January): rent-to-own properties.
"Rent-to-own provisions, which would give existing tenants the option to purchase their properties during their tenancies, might facilitate the transition of some renters back to the owner-occupied market," the report says. "Such provisions may also reduce costs by encouraging renters to maintain their properties to a greater extent."
Commercial banks and savings and loans in the U.S. own more than $11 billion in housing stock, a share of the marketplace referred to as real estate owned, or REO, properties. Bernanke supports the idea that a share of these creditor-owned properties be offered as "rent-to-own" properties rather than linger on the open market.
It remains to be seen if banks will take Bernanke up on his suggestion. But the concept of rent-to-own and lease-to-own housing may be gaining traction among individual buyers and sellers.
Hard numbers on how many such properties there are isn't easy to come by -- the National Association of Realtors, for example, doesn't keep a tally.
Nevertheless, Brett Furniss, president and owner of BDF Realty, a Charlotte, N.C.-based firm that specializes in rent-to-own properties, says there has been steady interest in these arrangements for the past few years.
"This isn't a new phenomenon," Furniss says. "When the market crashed in 2008, you started seeing more people looking at rent-to-own. I think the uptrend you are seeing now is because sellers realize that they can't sell their house for market value, so they are willing to entertain rent-to-own tenants, whereas in the past they just wanted to get the property sold. They still do want to get a house sold, but it's not a realistic thing anymore, so they want to look at other options."
"If you live in a property you can wait it out," he adds. "If it's vacant, you're just going to continue to make mortgage payments while the house sits on the market. Some people do that, but I think it's crazy. You want to market your home to the greatest number of people out there, and the greatest pool of people out there are renters and renters that want to be buyers. I don't know why you would continue to go after a diminishing pool of buyers who are so picky in this market. It is such a great buyers' market, and sellers are just getting killed."