Larry Lapidus

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Single Homeownership Is at Record Levels. Is It for You?

There was a time when buying a home as a single person was nearly unheard of. But that is changing. Actually, it already has. 

According to the National Association of Realtors, single individuals made up 25% of home sales in 2019. A whopping 17% of that 25% was single female buyers, many of them older. However, new data shows that single homebuying may be an even more substantial number.

“The share of U.S. homeowners who are single hit a record 38.4% in 2018, the latest data available, according to an analysis of Census Bureau data by Haus,” said USA Today. “The trend largely reflects rapid growth in the portion of Americans who are single. It also highlights an improving economy and job market and the willingness of buyers to set up households in untraditional ways to overcome sharply rising housing costs.”

Filter the single homebuying trend down to millennials and the number is even more eye-popping. “At a time when a lot of young adults are postponing marriage, the number of Americans buying a house on a single income is substantial,” said Investopedia. Ellie Mae says that “as many as 47% of millennial homebuyers last year were unmarried.”

If you’re considering buying while single, here are a few things to think about.

How much can you really afford?

Those who don’t even consider the possibility of buying a house as a single person may be waiting because they want to be more settled in their life first—married, starting a family, in a job with a solid trajectory, etc. But many people may also think they need more money set aside for a down payment or more income to support a monthly mortgage payment than they actually do. 

According to NerdWallet, “Most lenders require that you’ll spend less than 28% of your pretax income on housing and 36% on total debt payments. If you spend 25% of your income on housing and 40% on total debt payments, they’ll consider the higher number and the amount you can qualify for will be lower as a result.” 

When you break down those numbers, it may be that you’re already at or above that percentage with rent—especially if you’re in a market where it’s escalating quickly. This new report from Apartment List shows that rent is up 1.7% over last year. This is a modest increase and rent growth is lagging “behind the growth in average hourly earnings,” they said. However, when renters are paying top dollar for a place that isn’t even theirs, and that will likely continue to become more expensive, it creates instability while excluding them from the advantage of equity growth.

Are you prepared for an emergency?

According to experts, qualifying for a mortgage as a single person shouldn’t be any more difficult than it would be if you were married, as long as you have the credit, income, and employment history necessary to get approved for your loan. The main challenge of homeownership on a single income is the potential of job loss or some other financial hardship that could put your home at risk. On two incomes, it might be easier to absorb a financial hit. This makes a substantial emergency fund even more crucial.

“While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months’ worth of expenses,” said Wells Fargo.

Look to your friends

Just because you’re single doesn’t mean you have to live alone—or even buy alone. “Many singles team up with partners or friends,” said USA Today. “Unmarried couples made up 9% of home purchases last year, up from 8% in 2018, according to an NAR survey. ‘Other’ arrangements, such as roommates, comprised 3% of purchases in 2019, up from 2%. In some cases, both occupants own the home. In others, one owns while the other pays rent or contributes to household expenses.”

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