By Jonah Grinkewitz
High home prices, rising mortgage rates and a limited housing supply present challenges for many people trying to enter the real estate market.
One is for non-romantic partners —friends, relatives or colleagues — to co-purchase a home to increase their spending power, share costs and responsibilities and build equity.
A of more than 1,000 Americans by JW Surety Bonds found that almost 15% have gone this route with millennials (57%) and Gen X (26%) leading the charge. More than 6 in 10 respondents said they would co-buy a home with a friend, with Gen Z being the most willing (70%).
Even the real estate marketplace company Zillow is zeroing in on this trend with promoting the benefits of shared buying power among friends.
While this type of co-ownership may appeal to some, 98 social psychologist Christopher Sanders, Ph.D., said it could present significant risks.
“The worst outcomes of this type of arrangement involve one of the parties failing to uphold their contractual obligations,” he said.
If none of the parties involved would be able to afford the entire mortgage on their own, this could snowball into a massive penalty for everyone in terms of credit scores, unaffordable financial debts and bankruptcy.
Sanders explained that the "tragedy of the commons" also presents a social dilemma. When individuals share responsibility for an asset — whether it's furniture, an appliance or a common space — they often seek to maximize their own benefits while minimizing their costs.
“In housemate relationships, this will translate to an overuse and lack of maintenance of shared spaces (as compared to living situations in which one person or a romantic couple is responsible for those spaces),” he said.
This could lead to property values declining faster than in other mortgage arrangements, he added.
According to from the National Association of Realtors, married couples account for the largest share of home buyers at 62%.
Sanders noted that while this might not apply to all cultures, particularly those where arranged marriages are common, couples who have spent significant time together before buying a home are generally better at communication and resolving conflicts.
“When you spend time with someone, you understand them better; you learn about their habits, their history and the framework that they approach life from,” he said.
Moreover, he said, commitment in a marriage offers added support for relationship stability, as divorce typically carries higher social and financial costs compared to ending friendships. This gives married couples more motivation to work through differences and settle disputes, making them not only more skilled at doing so but also more determined.
In the JW Surety Bonds survey, individuals who co-purchased a home with a non-romantic partner did so along the following lines: 29% with a parent, 26% with a sibling and 26% with a friend.
Sanders said that just like married couples, siblings and close relatives will have a lot of prior experience with each other, and this added familiarity will help support the arrangement.
“The fact that they share a network of familial connections will mean that (A) there is a greater social cost associated with dissolving the arrangement and (B) there is greater potential for others (e.g., other family members) to help the co-owners succeed,” he said.
Some people choosing to co-buy with friends see it as an antidote to
And while Sanders said that cohabitation does reduce loneliness, on average, researchers debate whether it has a net positive or net negative psychological impact on people.
“Your attitude toward your housemate will likely change over time, but a lot of factors go into whether that attitude will become more positive or more negative — some of the strongest predictors of increasing relationship satisfaction are similarity in personality, beliefs and living styles,” he said.
Sanders highlights successful U.S. communes and house-sharing communities that thrive by leveraging shared religious beliefs, commitment-inducing rituals, limited private property and self-governance to overcome collective action challenges in co-ownership.