There was a time when a married couple was the dominant demographic for home buying. But not anymore. Singles – especially single women – and unmarried couples have joined the ranks of homeowners as co-buyers. There are also increasing numbers of co-buyers who are family who want to help but also want some of the home’s future equity.
ATTOM Data Solution’s Q1 U.S. Residential Property Loan Origination Report points out co-buyers are bringing some of the highest down payments to settlement. Nationwide the average is $56,911. That’s 46% higher than the average down payment. But that’s not quite the same thing that happens on the local market. The market share of single-family co-buyer sales is not as high here. Neither is the purchase price or the down payment.
There were 177 area co-buyer sales during the first three months of this year. Of that total 89 were in the three-county Johnson City Metropolitan Statistical Area (MSA) and 88 were in the four-county Kingsport-Bristol MSA.
Nationwide 17.5% of all single-family sales were co-buyers. Locally the share was 12.5% in the Johnson City MSA and 10.3% in Kingsport-Bristol. There wasn’t much difference in the other Northeast Tennessee MSA. Knoxville led the region with an 11.9% share of co-buyers while Morristown had a 5.8% share.
The average down payment in the Johnson City MSA was $12,764 – 8.1% of the $156,897 average purchase price. Both were smaller in Kingsport-Bristol. The average down payment was $10,509 – 7.4% of the $142,333 average purchase price.
“Homeownership rates are still hovering around historic lows — even though lenders continue to offer more low-down payment options,” said Michael Micheletti in the ATTOM’s report. He’s director of corporate communications at Unison, a company that provides down payment assistance to homebuyers in exchange for a share of any future increase in the home’s value. “Letting people borrow more doesn’t make buying a home more accessible or affordable. It’s not surprising that in places like Seattle, the Bay Area, and other challenging markets buyers are looking at ways to increase their purchasing power and reduce the amount of debt they are taking on. The sharing, co-buying, and co-owning of a home movement will only grow as more Millennials and Gen Z enter the marketplace.”
While the local market has a different set of dynamics buyers looking to increase purchasing power and cultural trends exert similar if not stronger impacts here. That increased buying power can be seen by comparing the average sales price for co-buyers with other buyers. In the Johnson City MSA, it was $11,085 higher. In Kingsport-Bristol it was $8,452 higher.
What wasn’t higher was the average percentage of the co-buyer purchase? It was 8.1% compared to 9.6% for other buyers in the Johnson City MSA. In Kingsport-Bristol co-buyer had an average 7.4% down payment while it was 9.5% for other buyers.
One that real estate professionals are beginning to see more often is unmarried couples buyer a home.
Sixteen percent of first-time buyers last year were unmarried couples, according to the National Association of Realtors. That’s a good economic move for couples in a committed relationship in an area like ours where it’s still cheaper to buy than rent. But it also comes hand-in-hand with additional risks.
One thing an unmarried couple should do before first is sit down with an attorney and create a co-ownership contract. Discuss and finalize things like what happens to the property if you split up, or if one person dies or become disabled, who pays for major repairs and the utility. Look at it as a prenup for the property