Personal Finance

Millennials create new trend: Couples who don't want to rush to marry, but still want to buy a house

Key Points
  • Today, just 57 percent of first-time homebuyers are married, compared with 75 percent in 1985.
  • For unmarried couples and singles, homeownership can be a little more complicated. 
New home sales growth concentrated in more affordable south: Expert
New home sales growth concentrated in more affordable south: Expert

Meg Taylor and Phillip Mitchell started dating in 2014. Within a few weeks, people were joking that they acted like a married couple. But they weren't ready to walk down the aisle.

They were, however, ready to become homeowners.

The couple bought a five-bedroom brown house with a bright red door in Glastonbury, Connecticut, where they had grown up. “We are definitely committed to each other; it didn't matter which one we did first,” said Taylor, 28, referring to getting married or buying a house.

Taylor and Mitchell's house in Glastonbury, Connecticut.
Source: Meg Taylor

Marriage and homeownership have long gone hand in hand. If you're a husband or a wife, your likelihood of owning property swells by nearly 20 percentage points, according to the Urban Institute.

But millennials, born between 1981 and 1997, are less likely to get married than their parents and grandparents, and when they do, it's often later in life.

In 1960, the average age women and men first married was in their early 20s; today, the median age for a first marriage is closer to 30. Millennials are three times as likely to have never married as members of the Silent Generation — those in their 70s and 80s — when they were young.

It's absolutely a trend. People feel fine purchasing a home without a ring.
Jessica Lautz
National Association of Realtors

But even without saying, "I do," many young people still want to become homeowners, to begin building wealth and to walk away from the uncertainty of renting.

Unmarried couples accounted for 16 percent of first-time homebuyers in 2017, the highest share on record, according to the National Association of Realtors. Single men and women accounted for a quarter of first-time homebuyers. Today, just 57 percent of first-time homebuyers are married, compared with 75 percent in 1985.

"It's absolutely a trend," said Jessica Lautz, the Realtors' managing director of survey research. "People feel fine purchasing a home without a ring."

Still, real estate lawyer Aaron Shmulewitz said that non-married couples purchasing a home together "should be aware of the pitfalls."

Unmarried couples

The median price an unmarried couple pays for their first house is $177,000, according to the Realtors.

As an unmarried couple, figuring out how to purchase a house can quickly become complicated and emotional, experts say.

Here’s why millennial prenups are on the rise
Here’s why millennial prenups are on the rise

Most married couples simply take the title, "tenants by the entirety." That wonky term means both spouses own 100 percent of the house. It's harder for potential creditors to go after the property if one of the spouses is in serious debt (at least while the other spouse is alive) because it doesn't belong to just that person.

In addition, "when one dies, the other surviving spouse immediately owns the dead spouse's interest," Shmulewitz said. "That's a pretty powerful benefit."

But this title is reserved for married couples only. Unmarried duos will either have to use a so-called "joint tenancy with rights of survivorship" or "tenancy in common" title.

If one of us dies, where does the house go?
William A. Cahill Jr.
estate-planning lawyer

Whether you should use a "joint tenancy" or "tenancy in common," title is an existential matter, said William A. Cahill Jr., an estate-planning lawyer in Brooklyn. The main question you should ask is, "If one of us dies, where does the house go?"

If it should go to the other partner, "joint tenancy" makes sense, but if it should go to one of the girlfriend's children, "tenancy in common" is typically better, Cahill said.

No matter how you take title to the property, if you're both on the deed and take out a mortgage, and if you both sign the note, you're both held "jointly and severally" responsible for the mortgage, said real estate attorney Fern Mehler.

"The banks don't care if he owns half the property and you have decided to split the bills, the banks will hold you both responsible, individually, to pay back the mortgage — all of it," Mehler said.

It's tough enough with married couples who get divorced. For individuals, they have to protect themselves.
Fern Mehler
real estate attorney

Unmarried couples should have a meaningful conversation sooner rather than later about how the house will be split and who will pay for what, Shmulewitz said. "When they have that discussion it can be very revealing of how strong that relationship is," he said.

The easiest way to sort out these logistics is through a handshake, but couples would be wise to get their the agreement in writing (most real estate lawyers can draw up these agreements). It can also be specified on the deed that, say, one partner owns 70 percent of the house and the other owns 30 percent.

Taylor, the homeowner in Connecticut, decided to have a legal document drawn up in case their relationship went south.

It specified that since she had contributed more than her boyfriend to the house's down-payment, she would also receive more of the house's value should they break up. They also agreed to switch off making their monthly mortgage payments. "I never thought we'd have to use it," Taylor said. "It was more of a worse-case-scenario piece of mind."

Still, if you and your partner decide to part, the situation is likely to become messy no matter the precautions, Mehler said.

"[It] could lead to a battle royale as to who put in most of the money and how much each would be entitled to in the event of a sale," Mehler said. "In this case, it would be helpful if there were records of all payments throughout the ownership: canceled checks, monthly bills, spreadsheets and tax returns."

In the end, you'll both have to put the house on the market or one will have to buy it from the other, potentially picking up legal fees and transfer taxes along, of course, with the cost of the partner's portion of the property at the time.

"It's tough enough with married couples who get divorced," Mehler said. "For individuals, they have to protect themselves."


"I’m independent and I don’t need to wait for a husband to do something that makes sense in my life,” said Jenna Smith, 25.
Source: Jenna Smith

Buying a house on your own? You won't need to struggle over questions of ownership or make any compromises. But being on your own as a homeowner has its own challenges, experts say.

Your financial picture alone will need to be sufficient to secure a mortgage. Single women pay a median price tag of $154,000 for their first house, compared with $145,000 for single men, according to the National Association of Realtors.

If the boiler blows, you better have enough money to take care of it.
Fern Mehler
real estate attorney

Jenna Smith, 25, bought a townhouse on her own in Antioch, Tennessee, for $160,000. She only had to put around 3 percent down on the house, but she needed to buy mortgage insurance as well.

She said it would be nice if there were someone to help her with the bills, but she likes that the house is in her name only.

Mehler said single homeowners need to make sure they'll be able to cover all of the myriad and sometimes unexpected costs of owning property.

"If the boiler blows, you better have enough money to take care of it," she said.

Since there is no automatic transfer of the property to a spouse after the property owners' death, she said, the need for a will is at its greatest.

“If you want it to specifically go to your sister or brother, it should go in writing, and that writing should be a will," she said.

The house Smith recently bought for $160,000. 
Source: Jenna Smith

Single people looking for a house may want to know that they could rent out the property if they decide to move because of a change in life status, said Jessica Cohen, an associate broker at Douglas Elliman Real Estate. "I would highly recommend checking what the rental value is and that you're allowed to rent," she said.

One day, Smith wants to get married and have a family. But she doesn't believe life's milestones need to go in any particular order.

"I’m independent and I don’t need to wait for a husband to do something that makes sense in my life," Smith said.

As for Taylor and Mitchell? They're getting married next Saturday.

More from Personal Finance:
This investment fee tax break is gone. Here's what it means for your IRA
Older Americans planning to downsize should brace for sticker shock
This threat could devour thousands of dollars from your estate