For a lot of people trying to buy their first home, affordability is what gets in the way. But some buyers are getting creative and still making it work by co-buying with others.
The dream of buying a home is still very much alive, it’s just that the numbers aren’t working out for everyone right now.
Young people haven’t given up on the dream of owning a home, not even close. According to FirstHome IQ, it’s still one of the top life goals for the next generation.
The challenge is that 73% of Gen Z and millennial buyers say affordability is what’s keeping them from making homeownership a priority. And it’s clearly having an impact. First-time buyers now make up just 21% of all home purchases, which is the lowest share since the National Association of Realtors started tracking it back in 1981.
Even so, some buyers are still finding a way to make it happen. A number of them are turning to co-buying just to get their foot in the door.
So, What’s Co-Buying?
Co-buying means buying a home with someone else, like a friend, sibling, or partner you’re not married to. You pool your incomes, split the down payment, and share the monthly expenses. For some people, it’s a practical way to turn “someday” into a real move-in date that’s not so far off.
And it’s picking up quickly, just look at where things stand right now. According to CoBuy.io, 64 million Americans co-own a home with someone they aren’t married to. In fact, 31.5% of home purchases now involve co-buyers, as shown in the graph below.
Why It Works
Here are a few of the main reasons buyers are choosing this approach, according to NerdWallet:
Quicker path to homeownership: If owning a home is a serious goal for you, buying with someone else can help make it happen sooner. With two or more people saving together, it’s usually much faster to build up a down payment. That means less time waiting and more time building equity in a home you own.
More purchasing power: When multiple incomes are combined, you may be able to qualify for a higher price range or a better neighborhood. In some cases, teaming up can help you get the home you actually want instead of settling for what you can barely afford on your own.
Easier loan qualification: Having more than one borrower can also improve your debt to income ratio, which lenders use when reviewing your application. They factor in all combined incomes when making their decision.
Lower housing costs: Splitting the mortgage and other expenses can sometimes make owning a home cheaper than renting. It can also make things like repairs and upgrades a lot more manageable since the costs are shared.
Things To Keep in Mind
If you’re thinking about going this route, there are a few things worth keeping in mind. Co-buying tends to work best with people you trust and who are on the same page financially. Before you move forward, it’s important to agree on how the costs will be shared, who’s responsible for what, and what would happen if one of you decides to sell later on.
That’s where a written co-ownership agreement can really help. It keeps everyone aligned and can prevent issues later on. Instead of just thinking of it as paperwork, it’s more like a shared game plan for your investment together.
Bottom Line
Affordability is still a real challenge, but it doesn’t have to mean putting your plans on hold forever. For some first-time buyers, co-buying is helping them stop waiting and start building a life and putting down roots.
If you’re wondering whether this could work for you, let’s talk. Reach out today and we can figure out your path to homeownership together.
