(NewsNation) — In a housing market where rising costs have driven the median age of homebuyers to 56 years old, many younger Americans are turning to a new strategy to buy their dream homes: partnering up, platonically, with friends.
This tactic, known as “co-buying,” is becoming increasingly popular, with one survey saying nearly 15% of Americans have purchased a home with someone who is not a romantic partner and that 70% of those in Gen Z would be willing to do so.
Homebuying experts say co-buying is a viable option for many but not without its risks.
“Because it’s a shared financial commitment, you need to be sure everyone’s finances are as strong as your relationships,” NerdWallet writes.
What are some benefits of co-buying?
The central benefit of co-buying is being able to afford a bigger, better home more quickly because of the pooling of resources. Also, the additional resources can make it easier to qualify for home loans and will result in mortgage payments being split, which could make owning cheaper than renting.
And, of course, there’s the additional time you can spend with your friends, assuming you actually like the folks you’re buying the house with.
What are some potential barriers to co-buying?
According to NerdWallet, one drawback of co-buying a home is the complexity involved in doing so. Since most lenders and real estate agents are used to working with couples, they might be reluctant to assist larger groups looking to buy a house due to the extra coordination needed.
There’s also the shared responsibility when it comes to the debt used to buy the home. If one of the co-owners has financial difficulties, the other owners may be on the hook for their portion of the loan used for the purchase.
NerdWallet recommends considering a legally binding cohabitation agreement before buying a home with your buddies. Such an agreement “can outline items like how the home will be used, how finances will be divided and what will happen to the property if one person decides to leave.”
Real estate expert Brendon DeSimone, who spoke last year to NewsNation’s “Morning in America,” concurs.
“Before you buy with somebody else, you need to have an agreement in place,” DeSimone said. “One contract in place which spells out how long you’ll live there, what happens if somebody needs to sell? Do you buy the other one out?
“It can become very contentious down the road. You have to have an agreement in place before you purchase.”
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