Making homeownership dreams a reality sooner

While the dream of owning a home remains an integral part of the American Dream, the reality of achieving this dream is becoming more elusive. The age of first-time homebuyers is increasing. In fact, the typical age to buy a first home has jumped to 36 years old, the oldest on record. This article explores why this delay is happening and offers solutions on how to achieve homeownership sooner.

The reality of delayed homeownership

Financial constraints are one of the key reasons delaying homeownership. The increasing age of first-time homeowners can be attributed to the rising costs of homes, and the larger down payment and monthly mortgage payments required. In fact, home values have reached record highs in recent months, forcing buyers to save and earn more than ever before, significantly extending the timeline for potential homeowners.

This delay in homeownership is not just a personal setback. The implications reverberate through the economy as a whole. Homeownership is a key driver of wealth creation, and its decline can have far-reaching impacts on wealth inequality and economic mobility.

The power of home equity

One of the key advantages of homeownership is the ability to build home equity. Home equity is the portion of your home that you truly own. It's the difference between your home's market value and the outstanding balance of all liens on your property.

As home prices increase, so does your equity. This is especially beneficial in an appreciating market where the value of homes is constantly rising. The sooner you become a homeowner, the more time your home equity has to grow in tandem with the market. Conversely, the longer the road to purchasing a home, the further out of reach homeownership becomes. As home prices rise, down payment savings requirements grow and higher qualifying income is needed for an increasingly hefty mortgage. In fast appreciating markets it can make homeownership feel like racing to catch a runaway train.

The sooner you can start building home equity, the better. Your home equity grows with the market, ensuring that you’re not left behind.

Co-investment as a path to earlier homeownership

For many first-time homebuyers, the down payment is the most significant barrier to homeownership. A solution to this challenge is a co-investment, a strategy where you partner with an investor to purchase a home.

In a co-investment arrangement, the investor provides a portion of the down payment, and in return, shares in the home's future value when it's sold or refinanced. This can significantly shorten the time needed to save for a down payment, enabling you to buy a home sooner.

Co-investment is not a loan, and you're not making any payments to the investor. Instead, you're sharing in the future change in the value of your home. This approach means you can reduce the size of your mortgage, translating to lower monthly payments and the opportunity to start building home equity immediately, without the burden of saving a large down payment.

One of the core benefits of this shared ownership is that it enables you to start building home equity right away. This is a huge advantage as the earlier you start building home equity, the more wealth you can potentially accumulate over time.

Conclusion

In an era of rising home prices and delayed homeownership, it's more important than ever to explore alternative paths to owning a home. Co-investment and shared ownership is a path that can enable first-time homebuyers to realize their homeownership dreams sooner.

This approach is about more than just buying a home sooner. It's about creating a steady path to wealth accumulation and financial stability. It's about making the dream of homeownership attainable, irrespective of market conditions.

So whether you're a first-time homebuyer or someone looking to get back into homeownership, a co-investment and shared ownership could be the key to making your homeownership dreams come true sooner than you think.