Real Estate Marketing & Beyond
Millennials who’re unable to afford a home on their own and can’t rely on their family to help are increasingly opting to co-buy a home with their friends.
Around 4% of first-time buyers in the period from July 2018 to June 2019 purchased their home with a housemate, according to data from the National Association of Realtors. That’s up by 100% from a year ago.
Jessica Lautz, the NAR’s vice president of research, told realtor.com that a lot of single buyers are looking for ways to become homeowners, and they’re looking to team up with others in a similar situation in order to do so.
“Finding someone who’s renting currently and matches your ideal [co-buyer profile] sounds like a great idea,” Lautz said. “Why not have a stable home and gain equity at the same time?”
Kelsey Perkins, a single mother of two, told realtor.com she bought a five-bedroom home worth $470,000 in Denver together with two of her friends. They all live in the home together, with each one paying $900 per month for the mortgage payments, and splitting the other bills.
“What we could do collectively was much more than we could do individually,” Perkins said.
Lautz reckons that the trend will expand beyond urban areas as millennials look to move into smaller towns where homes are more affordable.
But co-buyers need to be aware that the living arrangements can sometimes be tricky to negotiate. Michael Soon Lee, a broker-associate with Realty One Group in San Ramon, California, told realtor.com that housemates need to consider a range of issues.
For example, the names on the title of the property, the person responsible for collecting and paying the mortgage, and who takes charge of repairs and maintenance.
Buyers should also create a comprehensive legal agreement that covers each person’s responsibilities, and also plan an exit strategy in case one of the parties wants to end the deal.
“It is a business transaction, even if it is done among friends,” he said. “Compromise is the ultimate word. You’re looking for people who are flexible and have the greater good in mind. Those are the people who make this work the best.”
