The housing crisis being described right now in the media is one wherein prices are high, demand is high, and supply is low. Economists can predict a recession only due to the cyclical nature of our housing and stock market, but they cannot provide a reason for the future downtown. One offered solution is to build more houses because building more houses provides supply to the market and can reduce prices. To some extent I think this is true. But there’s a more fundamental problem that plagues our housing crisis: our idea of privacy and ownership.
What I’m proposing isn’t original. We already have multigenerational families who live under the same roof (grandparents, parents, kids, nephews, etc.). What I propose is that people change their mindsets about individually owning a house and decide to band together with friends and family to all own the same piece of property together. Our legal system already accommodates this arrangement in place through the use of tenancy in common or joint tenants—legal titles of persons who wish to own property. These legal titles go on public record and tell the world how the property will convey if that person passes away.
Here’s an example: Jones and Mary have been friends for 4 years and they both found themselves complaining about the rising prices of housing in the Bay Area. They each have their own families and they can qualify for a home loan but their maximum purchasing power is lower than the houses they intend to purchase.
So what if they approached the same lender and decided to buy a house together? I think they would have to make several considerations first: whether everyone’s on board with it, how will they take title, and does it make sense financially?
Let’s just skip to the financial picture: if you split a mortgage payment with another family unit, you’ll be really pleased about how affordable it is versus renting the same amount of space. Not only will you never have a landlord asking you to move out, but you’ll be building equity over time which can be later cashed out.
The other considerations are rather straightforward. You and your spouse come to terms on whether you can live with another family if it means getting higher purchasing power. Taking title is also somewhat straightforward. If you don’t want to have other persons on title to take your share when you die, then choose tenancy in common which lets your heirs take the share upon your death. This is of course a legal matter so please do your research in this manner, but the common sense approach is to let non-family members not take your share when you pass.
I think at this point your gut might be saying as an objection: but why do I have to compromise my housing situation just because they bay area is so expensive? One reply to this objection is that our society has built of the idea of individual ownership for everything that we likely have not considered the possibility for owning the same house with multiple people. And yet, when we rent, we seem to have no problem splitting the rent between people as if there were no compromise whatsoever. So if people split the mortgage together, is it any different than people splitting a rent check between each other?
Lastly, I think the major hurdle in getting this all started is this: I don’t think people know how to approach other people to decide to buy property together. It’s a foreign thing to suggest to others and it could make people think less of you. “You’re asking me to split a mortgage with you because you don’t make enough money to support your own family?” It’s a disgusting thought but I think people have a lot of pride in their family to solely provide for their own families that if they ask for help in any way they are perceived as weak and getting a handout. Another consideration is that it’s almost like writing a will—everyone should do it but no one gets around to it. But if people can communicate their financial situation better to others and if they weren’t ridiculed for it, or if a service did that, people could be better off. All it takes now is for people to band together, band their finances together, and see a mortgage lender together, which is something that rarely happens but I think needs to happen more if you want to see immediate relief in this so-called housing crisis.