WSJ Your Money Briefing - For Some Unwed Couples, Buying a New Home Comes Before Marriage

Episode Date: November 25, 2024

The number of unmarried couples who bought a house before they got married has risen by almost 50% from 10 years ago, according to a WSJ analysis of Census Bureau data. Reporter Dalvin Brown joins host J.R. Whalen to discuss why some couples are choosing practicality over tradition.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

This podcast is brought to you by CME Group, the world's leading derivatives marketplace, offering the widest range of global benchmark products across all major asset classes. CME Group, where risk meets opportunity. Here's your money briefing for Monday, November 25th. I'm JR Whalen for The Wall Street Journal. You know the saying, first comes love, then comes marriage? But for some unmarried couples, it's first comes love, then comes a mortgage. You know, rising rents and interest rates have created a sense of urgency for them. They say, hey, I have $50,000 saved today. That may not take me as far if I sit and wait. So they are jumping right into buying the home together before they even gotten engaged.

We'll talk to Wall Street Journal reporter Dalvin Brown after the break. The Goldman Sachs podcast featuring exchanges on rates, inflation, and U.S. recession risk. Exchanges on the market impact of AI for the sharpest analysis on forces driving the markets and the economy count on exchanges between the leading minds at Goldman Sachs new episodes every week. Listen now. Some unmarried couples are holding off spending on a wedding and instead putting their money toward a down payment on a home. Wall Street Journal personal finance reporter Dalvin Brown joins me. So Dalvin, first comes love, then comes a mortgage?

Exactly. More and more couples are skipping the traditional path of engagement, then marriage, then buying a home, and instead they're jumping straight into home ownership, seeing it as a more practical investment in their future. How many unmarried couples are doing this? So last year it was just over half a million unmarried couples who said they had recently bought homes together. And that's up 46% from a decade ago. And that's a huge jump. over half a million unmarried couples who said they had recently bought homes together.

And that's up 46% from a decade ago. And that's a huge jump. Now, just to be clear, are we talking about unmarried people in a relationship or are there also close friends doing this? For this story, we're talking mostly about couples in romantic relationships. There's definitely a growing trend of close friends

co-buying homes too, especially in an expensive housing market. So the people in romantic relationships, why are they buying as opposed to, say, renting a place? For the couples that I talked to, it's about investing in equity rather than paying rent indefinitely. You know, rising rents and interest rates have created a sense of urgency for them.

They say, hey, I have $50,000 saved today. That may not take me as far if I sit and wait. So they are jumping right into buying the home together before they even gotten engaged. So one of the sources I spoke to lives in Washington, DC, and they bought a condo together because they saw it as a more permanent step for their future, and they did that even before they got engaged. They plan to get married next year,

and what they've told me is that the wedding will cost less than the down payment on their home. Yeah, how does the expense of buying fit in with all the other expenses of living together and eventually getting married? These couples are saying that if they can get a mortgage together now, it often shakes out to be less than what they would end up paying for a wedding.

They also figure that housing prices are rising faster than wedding prices. And so they're like, hey, let's get the big purchase out of the way. And then a wedding can just happen when it happens. Around what age are these couples doing this? People of all ages are buying homes together before marriage or without being married.

But we're predominantly seeing this with people in their late 20s and 30s, millennials, around the same age when people are saving for either a wedding or to buy their first home. This is very different from how their parents did it. It is very different from how their parents did it, and it shows that priorities are shifting. Marriage is happening later in life for many people.

Buying a home feels like a bigger commitment for a lot of people and a smarter financial decision rather than moving to spend money on an expensive wedding right away. How about getting a mortgage? Does being married or unmarried matter in the eyes of banks? Not really in the eyes of banks. However, it does matter when it comes to your taxes. Couples who make around the same amount of money don't get the same tax benefits as married couples who have a larger salary gap. So maybe there's one spouse who is a stay at home parent

and the other is a breadwinner. You know, they get more tax incentives. But for these couples who are increasingly making close to the same amount, they don't get that same benefit. And they're saying, why get married now when we don't really have the same benefits as we would have or as our parents did? What kinds of agreements do the couples work out between them before buying? Lawyers recommend something similar to a prenup.

They call it a cohabitation agreement or a living together agreement. And that agreement will spell out who owns what percentage of the property, who pays for what, what happens if they break up. That's what they should do. But some of the data like that suggested that most people don't. And lawyers have said, too, that people run the calculation and they say, hey, it will cost us thousands of dollars to hire a lawyer to draft this agreement. Maybe we just wait until we can actually get a prenup

and wait until we're actually engaged or married. That's the kind of thing that they can work out between them. And some couples are doing it, but most don't. Well, what does happen if somebody wants to get out of the arrangement or they break up? What does that involve? It can get really complicated. If there's no formal agreement, selling the house or buying out the other person's share

is a negotiation. And those negotiations can get really messy without legal safeguards in place. If you wait until you both are angry at each other or mad at each other and trying to figure out how to separate your finances, things become very complicated. You could be looked at as essentially a roommate in the court of law if you haven't signed a document saying, like, I've invested this amount of money and this is what happens if we separate. But some of these couples have told me that things would get messy if they were married

and would divorce anyway. Attorneys told me it's a bit simpler when you're married because there's already legal structures for what happens should you divorce. That doesn't exist the same way for boyfriends and girlfriends and spouses who are unmarried and like investing in properties together. Things can get really thorny if you don't have these in place, but the couples say they hope we'll get engaged soon,

we'll get married soon anyway, and so then it maybe won't even matter for them. That's WSJ reporter Dalvin Brown, and that's it for your Money Briefing. This episode was produced by Ariana Asparu with supervising producer Melanie Roy. I'm JR Whelan for The Wall Street Journal. Thanks for listening.