In life, we all travel different paths but when it comes to certain milestones we are often on the same page. For example, tying the knot usually precedes applying for a mortgage.
So maybe that’s why I felt the need to always add a little more detail to the story when people asked what’s new in my oldest daughter’s life a year ago.
Along with the anticipation of receiving her college degree in December, she was in the process of looking at homes with her boyfriend – they’ve been together since high school, and he’s really a great guy, and they both were fortunate enough to find jobs right of school, and . . . – see, there I go again!
As it turns out, an increasing number of young couples in committed relationships are postponing their wedding vows and diving right into homeownership.
According to a Coldwell Banker Real Estate LLC Marriage and Homebuying Study, one in four married millennials (24 percent of US adults ages 18-34) purchased their first home together with their current spouse before they were married. By comparison, just 14 percent of US adults 45 and older purchased a home with their current spouse before walking down the aisle.
"The boundary of needing to be married before purchasing a home has been broken," Dr. Robi Ludwig, a leading psychotherapist and Coldwell Banker lifestyle correspondent, explained. "The younger generation seems to be a bit more realistic in that they are getting married later but want to plot out their life and prepare for financial realities."
Despite being branded as slow to grow up and fast to rack up debt, millennials are actually very pragmatic when it comes to buying a home, according to Ludwig.
“What we’re seeing is that young couples are switching up the order and purchasing their first home regardless of whether or not they have set a wedding date,” she said. “This is a huge movement within the American culture. While younger generations may be focusing more on their career, and in turn waiting longer to get married and have children, they are not delaying their dream of homeownership.”
In fact, the harsh financial realities of the past several years as the recession and housing market decline wreaked havoc on the nation's economy may just be the reason why the younger generation is realizing the need to build a financial safety net. With lower home prices and extremely affordable mortgage rates, real estate is now considered to be a savvy investment for many, with homeownership increasingly being shown to be a very realistic goal for younger couples.
“There's been this embracing of an opportunity," Ludwig said. "If, say, mortgage rates weren't as attractive, [homeownership] wouldn't have been as much of a possibility for the younger generation."
Along with taking advantage of the fact that today’s real estate market conditions could be a once-in-a-lifetime opportunity, millennial couples are proving to be bold when it comes to making big financial decisions according to Ludwig.
"It requires you to be financially transparent, and you have to have the maturity and forethought to say 'What do you want in the next five, 10, 15 years?' going into homeownership," she explained. "When a couple buys their first home, it's one of the most exciting new experiences they ever will share together. They not only learn about each other's wishes and dreams during this process, but they also learn how to be practical with each other and compromise. Buying a home has more of an impact on a couple's relationship than any other purchase they will ever make. It bonds two people together and makes them a family."
While the trend among unmarried millennials isn't the same across the country – the survey shows younger couples in the Northeast and Midwest are much more likely to purchase a home before marriage than those in what Ludwig characterizes as the more-traditional South – a growing number of younger couples are delaying or even forgoing flashy engagement rings and lavish wedding celebrations in favor of saving for the down payment on a home.
Even so, many college graduates are facing two major obstacles to home ownership - high debt levels and weak job prospects – leading to reports that this could impact the economy for years to come.
The Consumer Financial Protection Bureau suggests student loan debt is prompting a good number of millennials to put off home ownership, divert money from retirement accounts and forgo securing car loans.
However, with the real estate market clearly favoring homeownership again – rents, interest rates and median home prices have all been on the rise this summer – there is definitely a sense of urgency now. For those millenials currently renting or living with their parents, it’s not a matter of if, but when the time will be right for them to take that next step and buy a home of their own.