I ran across this article from by Jason Bronis from the Associated Press entitle, “As market falters, lease-purchase plans gain traction”.   It’s an interesting article about how distressed buyers and distressed sellers are using the “lease-purchase plan” in increasing home purchases, especially in the hard-hit markets in the U.S..    Here’s a Snippet as directly quoted from the article:

“Enter the lease-purchase option, which is surging in other hard-hit states such as California and Nevada, says Jim Grissett, an adjunct professor of real estate at Emory University’s Goizueta Business School.

“At a time when we have both distressed sellers and distressed buyers, I think it makes a whole lot of sense,” Grissett says.

Customers include Cecelia Robinson, 57, a writer who says she fled her home near Baltimore after a bad business move left her on the verge of foreclosure. Pride of Ownership Partners is leasing Robinson a three-bedroom, 21/2-bathroom home that the company purchased from a bank and renovated.

For three years, Robinson can continue paying rent, or opt to buy the house for the price an appraiser set at the time she moved in. If she chooses the latter, the company will give her a down-payment credit totaling half the rent she would pay over the three years, even if she decides to buy sooner.”

Here’s The Link: http://www.philly.com/philly/classifieds/real_estate/20090607_As_market_falters__lease-purchase_plans_gain_traction.html

While the Greater Baton Rouge could hardly be characterized as a “faltering market”, I wonder if the use of “Lease-Purchase Plans” are on the rise in our market?   I’m not seeing an increase, but then again, it would seem a rare occurence for the buyers/sellers to obtain an appraisal on a lease purchase deal. 

Bill Cobb, Appraiser

Greater Baton Rouge Subdivision Videos

The Greater Baton Rouge Real Estate YouTube Video Channel Features Video Housing Market Updates For The Greater Baton Rouge Area (East and West Baton Rouge, Western Livingston and Northern Ascension Parishes).

Sponsored By: Greater Baton Rouge’s Accurate Valuations Home Appraisal Group

To discover the answer, let’s look at two different periods of time – 8/07 to 8/08 (Post National Mortgage Meltdown) and 8/06 to 8/07 (Pre National Mortgage Meltdown)

Solds from 8/9/07 to 8/13/08 reveals:
Average Sales Price: $240,254
Average Sold Price Per Sq. Ft.: $93.38/sf
Median Sold Price: $243,500
Low Sales Price: $183,500
High Sales Price: $295,000
Average # of Days On Market: 99
# of Sales: 13
Excludes 2 REO Sales
 
Solds from 8/9/06 to 8/13/07 reveals:
Average Sales Price: $245,100
Average Sold Price Per Sq. Ft.: $86.02/sf
Median Sold Price: $239,500
Low Sales Price: $180,000
High Sales Price: $400,000
Average # of Days On Market: 97 Days
# of Sales: 14

In the 2 Comparison Periods, the average sold price declined by $4,846.  However, the 8/06 to 8/07 period statistics may have been skewed due to the higher than average $400,000 sales price in that period.   In the most recent period of time, the highest sales price was $295,000.   However, the average sold price per sq. ft. increased by +$7.36/sf or 8.56%  and the median price increased by +$4,000 or 2.67%.   So, based on the total picture of all 3 indicators, the Woodland Ridge market still gained in home prices.  

A comparison of the two different time periods, despite the troubles in the national housing market, shows a modest increase in median Woodland Ridge home sales prices of +$4,000 and +$7.36/sf or +8.56% increase over a 1 year period.  The Point here is that when one reads the constant negative national real estate headlines, the fact that Woodland Ridge had this many closed sales and values are still increasing in a “Post Mortgage Meltdown” and a “Tight Credit Crisis” market, that’s good news for the Baton Rouge Housing Market!

Woodland Ridge information is provided with the permission of the Greater Baton Rouge Board of Realtors.