The share of young unmarried couples buying homes together has been on the rise over the past decade, according to a new Zillow analysis.
As more and more young couples eschew marriage, they are showing their commitment without rings or vows by buying homes together.
According to the Zillow survey, among young (age 24 to 35) home-buying couples, 15 percent are not married, a 50 percent increase from 2005.
Home values across the country are rising at their fastest pace since 2006, and some of the nation’s hottest housing markets — like Seattle, Denver and Portland, Ore. — have surpassed peak home values reached during the housing bubble.
Moreover, the median home value in the U.S. is now $193,800 — up 7 percent over the past year. As homes become increasingly expensive, the need to purchase a home with someone else becomes a necessity — almost 75 percent of all buyers are married or in a relationship.
“Buying a home is a big part of The American Dream – equally shared by millennials and Baby Boomers alike – but it’s becoming extremely difficult to make it work on a single income,” said Zillow Chief Economist Dr. Svenja Gudell. “Many singles looking to purchase a home on their own may not make enough money to afford or qualify for a mortgage on their dream home. That makes buying a home with a significant other even more appealing, even if marriage isn’t quite part of the picture. Simply put, buying a home is much easier with two incomes. Assuming home value growth continues to outpace income growth, I imagine this trend will continue.”
Millennials represent the largest share of homebuyers, making up 42 percent of the market.
Today, many millennials face debilitating financial hurdles, such as student loan debt, that could delay home buying, but first-time home buyers are still expected to drive existing-home sales in 2017, according to Bankrate.com.
Purchasing a home before marriage has its potential hurdles. If both partners have their names on the title and the relationship sours, one or both can still be liable for paying the mortgage.
“The lender doesn’t care if you break up later,” said Greg McBride, chief financial analyst at personal finance website Bankrate.com.
Real estate experts have offered some advice. Unmarried couples may want to consider a home prenuptial agreement. A legal document can be drafted by an attorney that outlines the finances going into the home purchase, such as the way the down payment is split, and how future home repairs will be paid.
Unmarried couples can choose to hold title to property in several ways: as joint tenants, tenants in common or with one partner as the sole owner, said attorney Lina Guillen, family law editor for legal information website Nolo.
Tenants-in-common titling is the most common choice for unmarried couples, said Guillen, who is also a co-author of “Living Together: A Legal Guide for Unmarried Couples.” However, planning must always be kept up-to-date.
If one partner were to die without a will, there is no guarantee that his or her share of the property would go to the surviving partner.
A legal document also can outline details of how partners will share regular bills (such as the mortgage and utilities) as well as any unexpected expenses and capital improvements (such as replacing the broken fridge or renovating the bathroom), John Slowiaczek, president of the American Academy of Matrimonial Lawyers, told CNBC.