Young couples more frequently buy homes before planning a wedding
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After Amanda Zagone of Glen Ellyn accepted a marriage proposal from her high school sweetheart Michael Shumaker, her first thought was not to start looking for a wedding gown. Instead, she and her fiancé began shopping for a home.
"I wanted all that stress to be done with and out of the way before the wedding," said the 26-year-old teacher. "We just want to be ready to start our lives together."
They're not alone. A recent survey commissioned by Coldwell Banker points to a generational swing: 25 percent of married couples between 18 and 35 bought their first home before their wedding date, compared with just 14 percent of married couples ages 45 or older.
The shift is likely due to a number of societal changes, such as young people waiting longer to have children and putting greater emphasis on their careers, says Tonya Corder, president of the Mainstreet Organization of Realtors and managing broker of Keller Williams Preferred Realty in Orland Park.
"This isn't your parents' generation," said Corder. "They have different views on marriage, on family. But they still aspire to homeownership and we are seeing that play out, especially now that the market has picked up."
The next generation of buyers
"Millennials are the next generation of buyers," said Piero Orsi, president and CEO of RE/MAX Showcase in Lake County. "They're different — they have different needs. They like more freedom. They like to be able to walk or ride a bike places instead of using a car."
Orsi has helped to find homes for several couples in their 20s so far this year. Like many longtime Realtors, he welcomes the business but admits to being occasionally nonplused, such as when one young client mentioned he and his girlfriend planned on riding their bikes to Home Depot.
"I said, 'How are you going to carry a two-by-four home on your bike?' " he said with a laugh.
Orsi believes one of the major factors driving young couples into the market is that they are choosing to focus more on their careers early in their lives, with marriage and kids coming later.
"They buy now, and usually the wedding comes two to three years later, then maybe kids two to three years after that," he said. "Before it was just one income, with the mom staying home to take care of the kids. Now it's two incomes, no kids and two families to help out with the down payment. Lenders love it; they're easy loans. Everyone wants them."
According to new research, postponing marriage and parenthood may pay dividends later in life. A study from the University of Virginia, for instance, shows that for every year a woman delays motherhood she makes approximately 9 percent more in lifetime earnings. Women also enjoy an annual income premium if they wait until 30 or older to marry, the report showed.
However, Realtors say the factors driving couples' decisions to buy before marriage likely go beyond purely financial considerations.
"It's just getting more acceptable to live together before marriage," said Realtor Linda Djendi of Coldwell Banker in Glen Ellyn, who helped Zagone and Shumaker find their new home in Winfield.
Many even view living together as the logical next step between casual dating and marriage. That includes couples like Andrew Osman and Michelle Madden, both 24, who recently purchased a condo together in Palatine. Osman, who works as a 911 dispatcher in Glenview, met Madden, a teacher, through friends in January of 2011. The couple closed on a condo in May and has plans to get married one day, but not quite yet.
"I wasn't interested in getting married until we lived together," said Osman. "We viewed moving in together as the next step in our relationship. This way we get the experience of living together first, to make sure we don't kill each other.
"She hasn't killed me yet," Osman added.
Opportunity in the market
According to Osman, there was also another major factor driving his desire to buy — the opportunity available in today's market. Low interest rates often make a monthly mortgage payment much less than a rent payment.
"I wanted to own something," he said. "Especially around here with prices the way they are. We saved up enough money and I didn't want to burn through it by renting."
"With two incomes, and with interest rates where they are, at the end of the day you have a monthly loan payment that can be several hundred dollars cheaper than rent," said Anna Klarck, a Realtor with RE/MAX Showcase in Long Grove. "Why pay someone else's mortgage?"
Klarck recently helped a couple in their 20s — Jackie Stillman, a Deerfield pre-K teacher, and Collin McKillip, a high school teacher in Richmond — purchase a foreclosure in Grayslake several months before their wedding.
"We knew we'd be in this area for a few years and it's silly to rent because you're basically throwing money away," said Stillman. "We saw it as an investment opportunity. It's a buyer's market now and down the road we hope it will be a seller's market."
While buying a home may seem like the ideal investment to some young couples, they may also have to overcome issues that other buyers wouldn't. For instance, when it came time to get financing, Stillman's lack of credit history meant she and McKillip had to put the home solely in his name.
Klarck recommends buyers establish a credit history of at least 24 to 36 months, especially for FHA loans, which are popular with first-time buyers but have higher credit restrictions.
Another important consideration is cost. Some Realtors recommend purchasing a home where one party can afford the monthly payment on his or her own, at least on a temporary basis. It can be extremely stressful to have to live under the same roof once a relationship has ended and nearly impossible to get a partner's name off the mortgage — especially if the two used their combined incomes to secure the loan.
Still, most Realtors believe young couples have more to gain than to lose by purchasing in today's market.
"I would definitely recommend it for my son if he wanted to move in with a girlfriend," said Klarck. "I wish that when I was in my twenties I was in this kind of market. It's a one-of-a-kind opportunity. These people are very lucky."
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