Doug Sanders, 26, of Lima, Ohio, always figured he would buy a house after getting married one day.
“I thought it would take two incomes,” he says.
After graduating from college, he lived at home with his parents and got a sales job that left no time for vacations or going out with friends, allowing him to sock away much of his paycheck. A year ago, he landed a job as a sales representative for a top beermaker that came with a roughly 30% raise.
When his savings grew to $20,000, he started thinking big.
“I realized I had enough to put down on a house,” he says. “I would much rather buy than rent.”
Last October, Sanders, who is single, purchased a three-bedroom ranch house for $120,000 in the small, affordable city between Dayton and Toledo, putting down 20% with a little help from his parents. “They say there are three big decisions in life – who you marry, buying a house and career choice,” Sanders says. “Having one of those knocked out early … it definitely feels good.”
The share of U.S. homeowners who are single hit a record 38.4% in 2018, the latest data available, according to an analysis of Census Bureau data by Haus, a company that partners with individuals to buy homes to reduce their costs. The trend largely reflects rapid growth in the portion of Americans who are single. It also highlights an improving economy and job market and the willingness of buyers to set up households in untraditional ways to overcome sharply rising housing costs.
The shift, if it persists, could shake up the housing market as builders put up more affordable homes tailored to singles and first-time buyers. From 2015 to 2018, the share of new houses less than 2,400 square feet rose to 51% from 47%, according to an analysis of census data by the National Association of Home Builders.
The portion of Americans ages 18 to 34 who are single hit a record 72.3% in 2018, up from 67.2% a decade earlier and 47.6% in 1980, according to the Haus study.
“People are getting married later in life,” says Ralph McLaughlin, the chief economist for Haus.
Since the late 1940s, women increasingly have entered the workforce, prompting many to delay marriage, McLaughlin says. Although the share of women working or looking for a job peaked at about 60% in 2000, more are rising to higher-level positions that may require longer hours, further leading them to put off marriage and children, he says.
Many older millennials struggled to land the jobs they wanted during and after the Great Recession of 2007-09, spurring them to defer marriage while they set their careers on the paths they envisioned.
Many such singles still want to wait on marriage and build wealth through homeownership, taking advantage of a substantial run-up in housing prices since values hit bottom in 2012 after the real estate crash.
“Owning a home is a better deal than renting” in most of the country, McLaughlin says.
Also swelling the population of singles is the “gray divorce” trend. In 2018, a record 16.1% of people 55 and older were divorced, up from 13.8% a decade earlier and just 5% in 1980. Many baby boomers married early in life and sever ties after their kids reach adulthood and leave home, McLaughlin says. A divorce often produces two single homeowners as one spouse stays in the house while the other buys a condo or smaller house, or both make new purchases.
Solid economy but rising prices
A healthy economy also fuels the rise in single homeowners. The 3.6% unemployment rate is just above a 50-year low. Annual wage growth has averaged about 3% or better since mid-2018. Unemployment in Lima, where Sanders landed the beer sales job that helped him buy a house, stood at 3.8% in December, down from 4.7% a year earlier.
Nationally, the share of singles ages 18 to 34 who own a home rose from 47.1% in 2014 to 48.5% in 2018 – the highest level since 2009, according to the Haus report.
Making a purchase isn’t necessarily getting easier. The national median home price has climbed 54% since 2012, compared with 20% growth in average wages during that period, according to the National Association of Realtors (NAR). As a result, single homeowners are far more prevalent in markets with less expensive housing. In the Des Moines, Iowa, area, the average adult under 35 spends only about 19% of their monthly income on housing costs. Not surprisingly, nearly a quarter of all young adults are single homeowners in Des Moines, tops in the nation.
By contrast, less than 10% of young people are single homeowners in markets such as New York, San Francisco, Los Angeles and San Jose, the study says.
More singles are buying homes despite the financial challenges. For single-earner households, the median single-family house cost five times as much as median income in 2018, up from four times as much in 2011, according to Fannie Mae. For dual-earner households, a single-family home cost 2.57 times as much as household income, up from 2.03 times nine years ago.
Many singles team up with partners or friends. Unmarried couples made up 9% of home purchases last year, up from 8% in 2018, according to an NAR survey. “Other” arrangements, such as roommates, comprised 3% of purchases in 2019, up from 2%. In some cases, both occupants own the home. In others, one owns while the other pays rent or contributes to household expenses, says Jessica Lautz, NAR’s vice president of demographics and behavioral insights.
“People are getting creative,” she says. “It’s the American dream.”
After renting together in Washington for several years, Bethany Bennett and Elizabeth Darlington, who are both in their early 30s, separately started looking for two-bedroom condos in town at prices averaging about $400,000.
“It was a lot of money for a little bit of space,” Bennett says. “We realized if we joined forces we could get a house we really wanted.”
“And I really liked the idea of having extra space I could rent out,” Darlington says.
In May 2018, they bought a four-bedroom, 2,000-square-foot house in Northeast Washington for $650,000. Their individual down payment and monthly mortgage costs are about what they would have been if they had bought separate condos, but the larger space lets them have a roommate whose rent offsets about one-third of the mortgage expenses.
Darlington figured the bigger home will increase in value, providing at least as much profit for each of them at resale. They’ve divvied up tasks: Bennett deals with certain contractors, and Darlington handles roommate searches.
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Nicole Roeberg, an agent at Redfin, which brokered the sale, says she routinely sees such setups in Washington, one of the nation’s pricier housing markets.
“I had a client who bought a $1 million home and was all ready with a pack of three friends who were going to pay rent,” Roeberg says.