With virtually all mortgages today requiring a down payment, how is it that single men and women continue to account for nearly one-third of all home sales?
According to a recent Coldwell Banker survey, singles first topped 30 percent of the market in 2003 when no-down loans were common. However, the demise of no-down payment ARMs and the subsequent tightening of lending standards that today make 10 – 20 percent the typical down payment for a fixed-rate conventional loan, hasn’t dropped singles’ market share by even one point.
The new survey of single homeowners by Coldwell Banker reveals what many suspect: parents make it possible. Faced with the problem of coming up with as much as 20 percent of the cost of a starter home as well as closing costs, many first-time single buyers are turning to mom and dad, who in turn are getting some equity out of the deal. The survey found that of the single homeowners who own their home jointly with another party, almost half (49 percent) made the purchase with their parents.
Parents are not the predominant source of help for most singles, however, Among all buyers last year, only 18 percent of single women and 12 percent of single men relied on a gift from a relative or friend. Fifty-four percent of single women and 63 percent of single men relied upon savings, according to the National Association of Realtors.
The CB study also found that two-thirds of singles are buying below their borrowing limits. Sixty-eight percent of single homeowners purchased a home priced below what they could afford.