In recent years, co-buying with friends has been a popular way for many people to break into the housing market. With rising home prices and high interest rates, splitting the cost of a home seemed like a smart solution. But things are starting to change. According to a recent Zillow survey, the number of co-buyers purchasing homes with friends has dropped from 14% in 2023 to just 7% in 2024.
What’s driving this change? A key factor is the Federal Reserve’s recent interest rate cuts, which are starting to make mortgage rates more affordable. As borrowing costs go down, individual buyers are finding it easier to purchase a home on their own. Let’s dive into what this means for you—especially if you’re thinking about buying solo or co-owning with a friend.
Why Was Co-Buying So Popular Last Year?
In 2023, home prices were soaring, and interest rates were at their highest in decades. For many buyers, especially first-timers, co-buying was a way to share the financial burden. Splitting the down payment and monthly mortgage payments made homeownership more attainable, especially in competitive markets.
But co-owning with a friend can be tricky. You’re not just sharing the financial side—you’re also making long-term decisions together. As the market starts to shift, some co-buyers might be rethinking this arrangement and looking for opportunities to buy on their own.
How the Fed’s Rate Cut Changes the Game
The Federal Reserve recently lowered interest rates, bringing them down from 5.25%-5.5% to 4.75%-5%. This drop is good news for homebuyers because it makes mortgages more affordable. Lower rates mean smaller monthly payments, making it easier for individual buyers to purchase homes without needing a co-buyer.
With borrowing costs down, more buyers are finding that they can qualify for loans on their own, making solo homeownership more realistic than it was last year. As these rates continue to fall, we’re likely to see fewer people turning to co-buying as a solution.
What If You’re Co-Owning with a Friend?
If you’re already co-owning a home with a friend, this shift could lead to some tough conversations. With more affordable mortgage options, one co-owner might decide they’re ready to purchase their own place, potentially leaving the other in a bind. Whether it’s figuring out a buyout plan or deciding to sell the home and split the proceeds, now’s the time to start thinking about how to handle this new dynamic.
It’s important to have open discussions with your co-owner about your long-term goals and what happens if one of you wants to move on. The market is changing, and being prepared will help avoid any misunderstandings down the road.
Should You Buy Solo or Co-Buy in 2024?
As mortgage rates drop, buying a home on your own is becoming more achievable for many buyers. If you’ve been thinking about co-buying as a way to afford a home, now is a great time to explore your options as a solo buyer. Lower rates mean you might not need a co-buyer to afford the home you want.
That said, co-buying can still be a smart strategy in markets where home prices are high. But with mortgage rates falling, it’s worth seeing what you can afford on your own before committing to a co-buying arrangement.
Ready to Explore Your Mortgage Options?
Whether you're considering buying solo or co-buying with a friend, it's important to understand your mortgage options in today’s changing market. The Fed’s rate cuts could mean lower monthly payments and more purchasing power, but every situation is different.
Connect with one of our loan advisors today to find out how these changes could impact your homebuying journey. We’ll help you explore the best loan options and guide you through the process, so you can make the most of the current market.
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