Home Is Where the Heart Is
The American dream used to be pretty straightforward: fall in love, tie the knot, buy a home and raise a family. While that formula is still fairly intact, the “tie the knot” step is getting skipped increasingly, per the findings of a recent Zillow analysis.
Nearly 15 percent of all homebuyers between 24 and 35 years old are unmarried couples, up from 11 percent tallied in 2005, per a new Zillow study. Meanwhile, fewer solo buyers are claiming homes – single purchasers currently represent approximately 25 percent of all homebuyers in the 24- to 35-year-old demographic, down from 28 percent in 2005.
Svenja Gudell, chief economist at Seattle-based Zillow, attributes the two aforementioned trends to the fact that rising home values make buying a home on a single income very difficult, especially in more expensive markets.
“Home prices have grown so much over the past several years. Because of that, couples are going in a home together, as two incomes are better than one when it comes to making a mortgage payment, showing creditworthiness, and having enough funds left over for other expenses,” Gudell says.
According to research from the Pew Charitable Trusts, Millennials are cohabitating together minus matrimony at a higher rate: since 2000, the share of households with unmarried partners rose from 12 percent to 16 percent for 20- to 34-year-olds; over that same time, the share of households with married couples decreased from 45 to 35 percent.
“One of the big reasons why men and women are both delaying marriage these days is because young people are constantly being inundated with messages from movies and television that tell them it’s much more fun to be single,” says Alex Kamunya, partner with KAM House Buyers in Cambridge, Mass. “Throw in low-rate mortgages, rising rental costs and the ability to deduct mortgage interest from income taxes, and being a homeowner seems more like an attractive option for a couple. Also, once you reach a certain age, people often feel they are throwing their money away renting, so going in together on a house provides a unique investment opportunity.”
Nikki Arnone, 27, from Colorado Springs, Colo., agrees. She and her 31-year-old boyfriend purchased a home together last year and have no plans to head down the aisle anytime soon.
“The time for paying rent has passed us. It just made sense to make a 50/50 investment that might someday benefit both of us,” Arnone says. “Even if we don’t have a piece of paper that says we’re partners in the eyes of the law, it doesn’t change the fact that we function that way.”
One piece of paper that unmarried couples should consider carefully before purchasing, however, is the title on the home. One person can hold the title as sole owner, both can hold title as “joint tenants” or both can share title as “tenants in common.” With the latter, if one partner dies, their share of title goes to their estate or next of kin upon death; with joint tenancy, title passes to the surviving partner.
“To resolve these issues, it’s essential that you consult a lawyer to make sure you each know your rights, responsibilities and liabilities, based on the jurisdiction where you reside, and protect yourselves and each other to the extent possible,” says Dorothy Mazeau, sales representative with Royal LePage RCR Realty in Caledon, Ontario, Canada.
Tara Scott, a family law attorney and mediator in Beverly Hills, Calif., recommends creating a contract that clearly spells out all the terms of what happens when one party wants to sell, buy out the other’s share, or separate. It’s also important to know each other’s debt obligations and credit rating.
“Watch out for red flags – if one partner has bad credit, can’t qualify for a loan on their own, or has a history of nonpayment on debts, is that someone you really want to be financially tied to? If they don’t pay their half, you will have to cover it in order to not harm your own credit,” says Scott, who recommends that each partner hire higher separate lawyers to review the documents before signing to protect their own finances.