A ‘shift’ in how Americans are buying homes
Crazy or not, these four friends are part of “a transformative shift in how Americans approach housing,” according to CoBuy, an online platform that helps people through the co-ownership process.
They reflect a growing trend in “non-romantic co-ownership,” or buying a home with non-romantic partners.
A recent survey by JW Surety Bonds found that nearly 15% of Americans had co-purchased homes with non-romantic partners. Of those, 29% co-purchased a home with parents; 26% with siblings; and, 26% with friends.
Another 48% of survey respondents — predominantly singles and renters — would consider co-buying with a non-romantic partners. The top perceived benefits: sharing costs (67%), affording a better home (56%) and gaining investment opportunities (54%).
The survey suggested the trend is driven by “economic factors and a generational shift in values.” Currently, nearly one in three U.S. households spend at least 30% of their income on rent or mortgage payments and utilities in 2023, leaving little left for necessities like food and health care.
The U.S. Chamber of Commerce says “soaring rents,” a shortage of 4.5 million homes and high mortgage rates are driving a housing affordability crisis.
In a Time article on non-romantic co-ownership, Simmone Shah noted that inflation, increased cost of living and stagnant wages are reducing would-be buyers’ down-payment power.
It’s not surprising, then, that almost a quarter of those who co-bought a home said they “could not have afforded to buy the home otherwise,” according to the JW Surety Bonds survey.
While economics are a strong driver of the co-buying trend, changing attitudes also play a part.
“A generation ago, most Americans would have never considered the idea of buying a home with a friend,” Shah wrote, adding that “many millennials and members of Gen Z no longer view the traditional markers of stability — marriage, children and a white picket fence — as an inevitable or even desirable goal.”
And not everyone who co-buys does it out of economic necessity.
Passive rental income was a big motivator for 65% of the JW Surety Bonds respondents. Other reasons given were to share a property flip, establish a commercial space or buy a shared vacation or secondary home.
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Compare rates nowHow to choose co-purchasers
While co-buying comes with certain advantages, it’s not without challenges. One important early decision is choosing who to partner with.
Respondents to the JW Surety Bonds survey cite “trust in co-purchasers” as the top consideration and “interpersonal conflict” as the top drawback to co-buying homes.
For example, Mark said Nate and Stephanie were “the only people on the planet who we could imagine doing it with. We have a very balanced relationship with them.”
The process involved open and honest conversations about finances and what everybody wanted out of the arrangement.
Once you’ve chosen the right partner, there are still several issues to sort out.
CoBuy, which surveyed co-buyers and co-owners, found six core challenges, including:
- The co-ownership agreement
- Finances, expenses and payments
- Documentation and record-keeping
- Roles, rights and responsibilities
- Exit strategies
- Risk protection
“If you buy a house with other people, it’s important to treat it as a business as much as it is a living situation,” Mark said.
He and his co-owners engaged a lawyer to draft an operating agreement similar to what business partners purchasing property would have.
The couples also hold formal homeowner meetings and make decisions by voting. Each couple is responsible for upkeep and esthetics for their own unit as well as their own taxes and insurance.
Meanwhile, they split the mortgage and expenses for the common areas and yard.
Having their own bathrooms or kitchens helps them lead their own lives — and there’s room to grow within the units if anybody has kids.
“We refer to it as the ‘forever home,’ which might have been a joke at first, but since we’ve gotten in here, it does feel like it’s a very long-term living solution,” Mark said.
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