A co-buyer real estate purchase is one where multiple, unmarried buyers are listed on the sales deed. Current data on local single-family sales show co-buyers are likely very good news for sellers, his or her Realtor. And these co-buyer purchases can help push market prices a little higher.
- They almost doubled from Q1 sales.
- They accounted for 11% of all single-family sales.
- Their average down payment was $18,781 higher than the down payment for other sales.
- The average sales price was $11,491 higher than the average for other sales.
- The average sales price was $2,360 higher than average automated valuation model (AVM) price. The other sales average sales price was $11,600 below the AVM.
Unfortunately, Q2 co-buyer data isn’t available for the three-county Johnson City MSA. That region made the cut for reporting in Q1 but not for Q2. That’s a problem frequently see in data reports and an example of the downside of the legislative construct that divided the region into two MSAs. But that’s another story.
While co-buyer single-family sales were only 11% of Kingsport-Bristol single-family Q2 sales, they were 17% of single-family sales during the first half of this year.
That’s some of what regional-level data show about this segment of the housing market. Unfortunately, what it doesn’t tell us who are these co-buyers and what were the communities in the MSA where co-buyers are most active.
It’s easy to see why sellers, their agents, and lenders like co-buyers. Instead of a 7.4% down payment, they come to the table with an average 18.5% down payment. On average they’re buying slightly more expensive homes and they’re paying 1.4% above the AVM, which is slightly higher than the median for all residential sale in the Tri-Cities region.
Some co-buyers are unmarried couples willing to sign a mortgage but not willing to take wedding vows. This trend has boosted the level of legal implications that come hand-in-hand with such decisions. Others are reportedly parents who want to help Millennials get out of their room and cross the homeownership threshold. And there are also some examples of them being low-level investors. Low-level since they don’t make more than 10 purchases a year.
Regardless of who they are, the effect of higher co-buyer sales prices could boost the housing market in some areas if they are paying more than the other buyers in a specific community. They would boost the market because the higher price they pay would translate to higher comps.
Kingsport-Bristol didn’t quite come-up to 17.5% of all single-family sales reported on the national level in Q2. But their 18.5% down payment was better than the 16.3% reported on the U.S. level.
The big question is how the co-buyer trend will stand up to the headwinds of higher interest rates and a market that after two-and-a-half years of record sales is seeing the growth rate slow?