CHM Blog

Down Payments Before Diamond Rings

The cart before the horse? That’s what people used to say when couples either had babies or moved in together before deciding to marry. Now it’s two or three carts before the horse. The Wall Street Journal’s Dalvin Brown and Paul Overberg report on how couples are deciding they would rather take the plunge into homeownership than walk down the aisle.

“In reshuffling the traditional order of adult milestones, some couples may decide not to marry at all, while others say they are willing to delay a wedding,” say the journalists. “Buying a home is as much, if not more of a commitment, they reason. It helps them build financial stability when the housing market is historically unaffordable."

Brown and Overberg report that In 2023, about 555,000 unmarried couples said that they had bought their home in the previous year, according to a Wall Street Journal analysis of Census Bureau data. “That is up 46% from 10 years earlier, when just under 381,000 couples did the same,” they said.

They go on to say that unmarried couples amounted to more than 11% of all U.S. home sales — a percentage that has climbed steadily over the past two decades all while marriage rates have fallen — making up triple the share of the housing market that they did in the mid-1980s, according to the National Association of Realtors.

Young couples are increasingly prioritizing homeownership over marriage, driven by soaring housing costs and changing social norms. While this arrangement offers financial benefits, it also comes with unique legal challenges that couples must navigate carefully.

Middle-agers Mark White and Sheila Davidson exemplify this trend. They purchased a lakeside townhouse together in Newport News, Virginia, in 2021, though only Davidson's name appears on the deed. Without marriage documentation, they face uncertainty about inheritance rights, despite their children knowing their wishes.

The financial motivation is clear: homeowners held a median wealth of nearly $400,000 in 2022, compared to roughly $10,000 for renters, according to Federal Reserve data. This stark difference has led many couples to prioritize building equity over traditional relationship milestones, say Brown and Overberg.

They cited another couple still in their 20s who decided rising interest rates prompted quick action. They used $80,000 of their combined savings to purchase a split-level condo in Washington, D.C. "Buying a house is actually a bigger commitment than an engagement," Dixon noted. They got engaged eight months after closing, planning a modest ceremony that will cost less than their home's down payment.

The timing reflects broader societal shifts. The median age for first marriage has increased to 30.2 for men and 28.6 for women, according to Census Bureau data. Similarly, the National Association of Realtors reports that first-time homebuyers are now typically 38 years old, up from 31 in 2014.

However, legal experts warn about the risks. Without marriage protections, property rights and financial obligations can become complicated if the relationship ends. While cohabitation agreements can provide similar protections to prenuptial agreements, many couples avoid them due to cost or discomfort with planning for a potential breakup. These agreements typically cost between $1,000 and $3,000.

Recent data supports these decisions. From 2019 to 2023, median single-family home prices rose 44%, while average wedding costs increased 25%, according to the National Association of Realtors and The Knot, respectively.

Rising rental costs are another factor pushing couples toward homeownership. About three-quarters of couples now live together before marriage, forcing them to weigh the benefits of buying versus renting. For Sonali Prabhu and Ryan Willis, both 27, an $800 rent increase on their Austin apartment spurred them to purchase a $425,000 house. While their mortgage payment is slightly higher than their previous rent, they gained significant space. They split the down payment, with Prabhu contributing an additional $50,000 for renovations.

This shift reflects a new reality where financial foundations often take precedence over traditional relationship markers. As Emily Luk, co-founder of the financial website Plenty, observed, "A mortgage feels like a more concrete step toward their future together than a wedding."

WSJ,TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are under pressure today. The MBS market improved by +63 bps last week. This was enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Jobs 2) The Fed and 3) Geopolitical.

1) Jobs: Its the first week of a new month which means its time for Big Jobs Friday! We get a TON of job and wage related data every day this week starting off with today's ISM Manufacturing Employment Index and culminating with Friday's Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings and more. Broadly speaking, the higher the wage data appears the worse it will be for rates. However for jobs numbers more weight will be given to the private sector reports (Challenger, ADP, ISM) versus that from the BLS.

2) The Fed: We have a busy schedule this week as we enter the media "black out" period next week leading up to the December FOMC meeting. Wednesday will take center stage as we hear from Fed Chair Powell and get the Beige Book.

3) Geopolitical: As the Cabinet picks are rounding out and the markets know who the Treasury Secretary, Commerce Secretary will be along with the heads of the SEC, etc. Markets are trying to gauge the bifurcation of deeper tariffs versus massive Government waste/costing cutting (DOGE), lower regulations, etc.

This Week's Potential Volatility: High

This morning markets are under pressure as traders return to business. Volatility has started at moderate levels with lots of potential to increase to high levels later this week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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