Shared Homeownership - A Brief History
Shared homeownership is not a new concept. Families and close-knit communities have shared living spaces and responsibilities for centuries. This communal model of living saw a decline with the advent of industrialization, and by the mid-20th century, more than 7 in 10 home purchases in America were made by married couples. That number has fallen to below 50% today. With affordability at record lows, America's housing market has found a renewed interest in shared homeownership. The modern home (co)ownership movement, driven by high housing costs and a growing urge to reduce the feelings of isolation that technology has created, has made shared living arrangements more popular than at any point in modern American housing.
The Resurgence of Shared Homeownership
The escalating costs of real estate have made solo homeownership challenging for many. In response, shared homeownership is gaining traction. By pooling resources, individuals can afford larger, more desirable properties. This collaborative approach not only reduces financial burden but also enhances social and emotional well-being.
In fact, the 2023 consumer housing report done by Zillow found that 62% of homes were purchased by more than one person and 26% of homes were purchased with family and friends (eg non-romantic partners). The social and economic impact of shared housing can be realized in a number of ways.
Benefits of Shared Homeownership
- Nicer Homes at Lower Costs: Pooling financial resources allows for the purchase of more substantial, well-located properties that might be unaffordable individually.
- Shared Responsibilities: Household chores, maintenance, and financial obligations can be divided among (co)owners, reducing individual stress and workload.
- Increased Freedom and Flexibility: Shared homeownership can offer more flexibility in living arrangements and financial commitments. Some may realize a higher quality of life by owning shares of a home in two or three different places than owning a single home.
- Tax Benefits: (Co)owners can take advantage of tax deductions related to mortgage interest and property taxes.
- Social Value: Living with friends or like-minded individuals fosters deeper relationships and a supportive community environment.
Although the benefits of shared homeownership seem plentiful, there are some critical factors that will help determine the success and enjoyment that sharing a home with others can offer.
Choosing the Right (Co)Owner
Selecting the right (co)owner is crucial for a successful shared homeownership experience. Buying a home with another person is as much an investment in that person as it is in the home. The depth of the financial and social is not a decision that should be made lightly. Every aspiring home (co)owner should consider the following factors:
- Compatibility: Ensure your potential (co)owners share similar lifestyles, values, and social habits.
- Communication Skills: Open communication and trust are essential for resolving conflicts and making joint decisions.
- Financial Stability: Choosing (co)owners with stable incomes and good credit scores will make the mortgage approval process significantly easier while also reducing the financial risks.
The Process of Getting Qualified for a Joint Mortgage
- Credit Check and Pre-Approval: All potential (co)owners should have their credit scores checked. Lenders will assess the collective financial health of the group.
- Down Payment and Financial Contributions: Agree on how much each person will contribute to the down payment and ongoing expenses.
- Legal Structure: Decide on the legal structure of your (co)ownership. Options include joint tenancy, tenancy in common, or forming a limited liability company (LLC).
- Mortgage Application: In the event you want to apply for a joint mortgage, all (co)owners’ financial information will need to be provided.
Here at Tomi, we partner with you through every step of the design and qualification process. Helping you and your buying party align on some of the most important decisions.
Key Terms to Agree Upon Before Moving Forward
- Exit Strategy: Determine how a (co)owner can sell their share and under what conditions.
- Financial Decisions and Expectations: Agree on how expenses will be shared and how financial decisions will be made.
- Use of Space: Define the use of common areas and private spaces to prevent conflicts.
- Maintenance and Repairs: Decide who will be responsible for regular maintenance and unexpected repairs.
- Conflict Resolution: Establish a process for resolving disputes among (co)owners.
How Tomi Can Help
At Tomi, we specialize in creating custom home (co)ownership experiences. Our goal is to help you and your friends navigate the complexities of shared homeownership, ensuring a smooth and rewarding journey. With Tomi, you can create the life you want with the people you want in it?
Contact Tomi today and start your journey to home (co)ownership: https://formless.ai/c/FpDx4qDJtVZp