A New Movement Making Homeownership More Attainable for Americans in 2024
In 2023, around 2.4 million renters in the U.S. were unable to buy their own homes due to rising costs, as reported by Habitat for Humanity. The median income required to afford a home increased by 20%, reaching $117,000. However, the average income in the U.S. was only $57,406, according to DemandSage.com. Even with two adults earning this average income, it still falls short of the amount needed to purchase a home.
Given these financial challenges, it’s not surprising that nearly 15% of Americans have decided to buy homes with friends, family members, or other non-romantic partners, according to a survey by JW Surety Bonds. Additionally, 48% of people said they would consider this option. Hannah Workman from JW Surety Bond noted that this trend might continue, as nearly one in four people who co-bought a home said they couldn’t have afforded it on their own. For those determined to own a home, co-purchasing could be the most practical solution.
Gen Z is particularly open to co-buying homes, with 70% of respondents from this generation expressing willingness to do so. This younger generation is adapting to economic challenges by considering alternative paths to homeownership. They see co-buying not just as a financial strategy but also as a way to strengthen relationships. About one in four Gen Zers believe that co-buying can enhance relationships, and they are less concerned about the risks of default or uneven investment.
Co-buying a house can make homeownership more accessible for people who might not have the income or credit history to secure a mortgage on their own. It also offers benefits like sharing costs, affording a better home, investment opportunities, sharing responsibilities, building equity, tax benefits, and strengthening relationships.
However, co-buying also comes with challenges. The most cited drawback is interpersonal conflict, mentioned by 79% of people. Other concerns include legal and financial complications, potential financial loss, difficulty selling or transferring ownership, risk of default, unequal investment, inheritance issues, and impact on credit.
To protect your investment when co-buying a home, it’s important to draft a legal agreement outlining each person’s responsibilities and rights. This agreement should cover how mortgage payments, property taxes, insurance, and maintenance costs will be divided. It should also address roles and responsibilities beyond financial aspects, such as living arrangements and the use of common areas. Updating this document as needed can help prevent disputes. Additionally, the agreement should include an exit plan in case one party wants to sell or doesn’t fulfill their obligations.