A buyer I have been working with recently decided to put their home search on hold for a year. They were qualified to buy, but because they needed to ask sellers for closing-cost concessions, their offers weren’t as competitive as they wanted them to be. Their plan was straightforward: keep renting, save more cash and return to the market in a stronger position.
Then they called me. A friend was doing what they described as “renting to own” through a lease option program, and they wondered whether that might be another path.
The concept was familiar. Years ago, I worked with clients using Home Partners of America. Participants were approved for a maximum monthly rent and could shop for a qualifying home within the program’s guidelines. Home Partners would buy the house, the participant would lease it, and they would have the option to purchase it later. I thought it was a pretty clever model. Someone interested in homeownership could choose a house they might eventually want to own and live there while preparing to buy.
The participants I worked with generally entered the program assuming they would eventually purchase the home. What caught my attention was what happened later. When the time came to decide whether to exercise the purchase option, many no longer seemed particularly interested in doing so.
Recently, I found data that made me think about those experiences again. The Pew Charitable Trusts examined lease-purchase programs and reported that Home Partners enrolled 19,455 households between 2012 and 2021. Of those, 4,365, or about 22%, converted to homeownership through the program.
It’s easy to look at that number and see the other 78% as unsuccessful outcomes. In fact, that was pretty close to my first reaction. Why didn’t they buy? But the more I thought about it, the more I wondered whether that was the right question.
There are plenty of possible answers, and the available data don’t allow us to assign one explanation to all of them. Some may never have become eligible for conventional financing. Income, credit, interest rates or life circumstances may have changed. Some may have purchased a different home.
The economics of the program matter too. Companies offering lease-purchase programs aren’t charitable organizations. They are providing a service, assuming risk and tying up capital, and that service comes at a cost. With Home Partners, future purchase prices were established in advance and increased over time. Someone could still very much want to become a homeowner and reasonably conclude that purchasing that particular house at the option price no longer made financial sense.
And perhaps some simply changed their minds. We don’t know how many, if any, fell into that category, but I find the possibility interesting because we tend to treat homeownership as a destination rather than one of several housing choices.
Homeownership occupies a special place in American culture. We associate it with stability, financial success and, of course, the American Dream. There are good reasons for some of that. Homeownership can be an effective way to build wealth. It can provide greater control over where and how we live, and for many people it creates a sense of permanence that renting does not. It is also something many of us simply grow up expecting to do.
For someone raised in a family of homeowners, buying a house may feel like a natural progression of adulthood. Someone else may pursue ownership very deliberately because they understand its long-term financial benefits. Another person may absorb the message from family, government, the housing industry and decades of marketing that homeownership is what successful adults eventually achieve. At the same time, there are renters who desperately want to own but cannot see how the numbers will ever work, others for whom homeownership may never have seemed like a realistic possibility in the first place, and people who could own but simply don’t want the responsibilities that come with it.
We tend to talk about all of them as though they’re somewhere along the same journey toward homeownership, and maybe that’s the assumption worth questioning. We should absolutely continue looking for ways to make homeownership attainable for people who want it. Someone shouldn’t miss that opportunity simply because nobody showed them a path or because unnecessary barriers stand in the way. But making homeownership available to everyone is different from deciding that homeownership should be the goal for everyone.
That distinction seems particularly relevant when we look at programs designed specifically to bridge the gap between renting and owning. When I first saw that only 22% of the Home Partners participants in Pew’s data converted through the program, my instinct was to ask what prevented the others from buying. Maybe that’s only part of the question.
An option exists precisely because someone doesn’t have to exercise it. If a participant eventually decided the price was wrong, the house was wrong, their circumstances had changed or they simply wanted something different, declining to purchase wasn’t necessarily a failure.
My current buyer is a good example of how poorly the labels sometimes describe the decision. They want to own a home and are qualified to buy one, but they’re choosing to rent right now because saving additional cash may allow them to compete more effectively for the home they eventually want. Hearing about a lease-option program simply gave them another route to evaluate. The goal hasn’t necessarily changed. The question is which path, and which timing, makes the most sense.
Perhaps that’s a better place to start our conversations about housing. Instead of simply asking, “Do you want to own a home?”, maybe we should first ask, “What do you want your housing to do for you?”
The answer might be wealth building, stability, flexibility, control, a yard, a particular neighborhood or freedom from maintenance responsibilities. Sometimes homeownership will be the best way to get there. Sometimes renting will. And sometimes the answer may simply be, “I want to own, just not yet.”
Homeownership deserves to be an attainable option. It doesn’t have to be the definition of success.
Karen Moeller
STLKaren.com
Karen.McNeill@STLRE.com
314.678.7866
About the Author:
Karen Moeller is a St. Louis area REALTOR® with MORE, REALTORS® and a regular contributor to St. Louis Real Estate News, helping clients make informed, data-driven decisions.
