Why More Singles are Buying Homes
About 10 years ago, the number of singles buying homes was 10% to 12% of national home purchases. Those numbers included divorced parents, young singles who were first-time homebuyers and retirees who had lost a spouse.
Today this trend is growing, according to the latest data from the National Association of Realtors (NAR).
The number of singles buying homes has amped up significantly since the Great Recession, partly due to demographics at either end of the spectrum: young singles in the workplace who have decided homeownership is still a good investment and baby boomers now single looking for a smaller, perhaps, urban place to live.
In Chicago, first-time homeowners now account for about 40% of home purchasers, notes Bill Schwers, regional sales executive and senior vice president of Bank of America Home Loans in Chicago.
Perhaps the most surprising statistic from the bank is that of the single, first-time homeowners, about one in five are women. This number tracks the national average, says Schwers.
So, what does it take for a single to buy a home these days?
Lenders can’t discriminate so the same underwriting criteria and qualifications apply. Banks look for a good track record in regard to credit, decent savings and the ability to meet mortgage payments into the future.
Considering all that has happened to the home market, such as plummeting values during the Great Recession, one would think singles might have a bit of concern about homeownership, especially since there isn’t a spouse around to take up the slack if someone in the family loses his or her job.
Lenders are just not seeing buyer hesitancy, says Schwers. “There is little fear.”
Nevertheless, as a lender, Bank of America tries to do a bit of extra outreach.
“We are really encouraging education, such as meeting with the potential homeowner and getting an understanding of what he or she wants to accomplish,” he adds. “We like to see their budget and credit history. Then we walk them through the process to give them some confidence.”
In a city such as Chicago with many condominium projects that are appealing to the older, retired single who might be giving up a house in the suburbs, this could be problematic since condo loans are harder to get these days.
“This does add another layer of complexity,” Schwers admits, but big lenders have been trying to get ahead of this potential problem by ascertaining which condo developments are stabilized and creditworthy.
“If it’s a brand new condo and the building hasn’t met owner-occupancy percentages or the homeowners association isn’t in place, these could be sticking points,” he notes. “If there is an established homeowners association, occupancy levels are good (Fannie Mae and Freddie Mac like homeowner percentages at 70% or greater) and the project isn’t investor over-weighted, we can go in and make loans.”