How Co-Buying a Home Makes Homeownership More Affordable Today

Navigating today’s housing market can feel overwhelming, with rising home prices and mortgage rates putting a strain on your budget. If you’re feeling stuck, co-buying might be a solution worth exploring. As Freddie Mac explains:

“Purchasing a home with family or friends may be a viable path to homeownership for those striving to enter the market.”

However, before diving in, it’s essential to weigh the pros and cons. Let’s take a closer look at why co-buying is becoming a popular strategy and determine if it might be the right fit for you.

What Is Co-Buying?

Co-buying involves purchasing a home with another person, such as a friend, sibling, or even a group. Given the challenges of today’s market, this approach is gaining traction as a way to share costs and responsibilities.

According to a survey by JW Surety Bonds, nearly 15% of Americans have already co-purchased a home, and an additional 48% are open to the idea.

Why Consider Co-Buying?

The same survey highlighted some of the top benefits of co-buying a home. Here are the most common reasons (see graph below):

Splitting Costs (67%): From saving for a down payment to managing monthly mortgage payments, purchasing a home is a significant financial commitment. Co-buying allows you to divide these costs, making homeownership more attainable.

Affording a Better Home (56%): By combining financial resources, co-buyers may afford a larger or higher-quality property than they could on their own. This might mean gaining that extra bedroom, a spacious backyard, or the opportunity to live in a more desirable neighborhood.

Creating an Investment Opportunity (54%): Co-buying can also serve as an investment. Partnering with someone to purchase a home that can be rented out could generate passive income and increase long-term value.

Sharing Responsibilities (48%): Homeownership comes with ongoing tasks like maintenance and upkeep. Co-buying enables you to share these duties, easing the workload for everyone involved.

Other Factors to Consider

While co-buying offers many advantages, it’s crucial to think through the potential challenges before committing. As Rocket Mortgage explains:

"Purchasing a home with one or more friends could be an excellent way to achieve homeownership, but it’s a decision that requires careful thought. Make sure to fully understand the financial, logistical, and emotional factors that could impact both the purchase and your relationship."

Before moving forward, ensure that you and your co-buyer align on key aspects, such as how expenses will be divided, who will take on specific responsibilities, and what steps to take if one party decides to sell their share of the property in the future. Consulting with a real estate expert can help facilitate these conversations and guide you through the decision-making process.

Bottom Line

If you’re striving to achieve homeownership but finding it challenging to navigate today’s higher rates and prices, co-buying could offer a practical solution to help you take that important step. By partnering with someone to share the financial and logistical responsibilities, you may be able to make your move happen sooner than expected. However, it’s crucial to approach co-buying with careful planning and ensure that everyone involved is on the same page about key details, such as financial contributions, responsibilities, and future plans. To determine if co-buying is the right path for you, consider reaching out to a local real estate agent who can provide expert guidance and help you weigh the pros and cons based on your unique situation.