SALT LAKE CITY (AP) – One night, Joey Howell and his three-year-old roommate were drinking beer and hanging out when their conversation turned to real estate. Two of her friends recently teamed up to buy their first home together.
“I think that inspired us because we were like, ‘Oh, hey, that seems like a great idea,'” said Howell, 32.
After years of renting, Howell said he was tired of not building equity and unable to work on home improvement projects with his roommate.
That conversation became a reality in 2015 when the two jointly purchased a 3-bedroom, 2-bathroom single-family home near Liberty Park for about $ 250,000. They agreed to split the cost of the house in the middle.
As young adults face rising housing costs combined with stagnating wages and significant student debt, millennials – the cohort born between 1981 and 1996 – are buying real estate with friends to help them realize their dream of owning a home. The Salt Lake Grandstand reported.
Millennials home ownership trends
Wall Street Journal real estate data shows the number of co-buyers with different surnames rose 771% between 2014 and 2021.
According to Dejan Eskic, Senior Research Fellow at the University of Utah’s Kem C. Gardner Policy Institute, this trend is a sign of the lack of affordable housing.
“Home ownership is inaccessible to more and more people every day because prices are rising so quickly,” said Eskic.
According to the US Census Bureau, just under 40% of people under 35 owned a home in 2020. That compares to about 80% of people over 65 who have owned a home. In Utah, approximately 42% of home loan applicants were under 34 years of age last year, according to Eskic.
In previous generations it was common for people to get help from their parents in order to be able to afford a down payment on a home. However, millennials are the first generation likely to have lower net worth than their parents, Eskic added.
Middle class wealth is often stored in home equity, he said.
“If you’re a tenant, your equity is less than $ 10,000, and that has a huge impact,” he said. “Millennials are falling behind”
After Howell lived in the house for years, which he jokingly referred to as his “platonic house mate”, he decided last year that it was time to sell. They sold the house for almost double the price in the early days of the pandemic. Months later, Howell bought another 3 bedroom single family home in the same neighborhood. Alone this time.
Howell said he couldn’t have paid the down payment on his new $ 460,000 single-family home in Salt Lake City without the profits from selling his first home with a friend.
“I couldn’t afford this house,” Howell said. “The decision to do that to my roommate was one of the best decisions I have ever made.”
Eric Stonehill, 33, the mutual friend who inspired Howell to build his first 50/50 home, recently sold the single-family bungalow he bought with his roommate after accepting a job offer in Denver.
However, Stonehill, who works as a chemical engineer, regrets selling the house during the COVID-19 crisis. After selling the house in April for almost three times the original purchase price, Stonehill now feels excluded from the housing market. He wants to return to Salt Lake City and plans to buy a duplex with a friend.
“I’m in the exact same place as I was (seven) years ago in terms of entering the market,” he said. “Most of this is due to the pandemic and there is no inventory.”
Howell and Stonehill agree that it is important to move in with someone you trust and have a solid exit plan before sharing a home with a friend.
“It’s a good investment,” said Eskic. “Not only are you losing money on rent, you are actually building on something.”
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