August 27, 2019

A New Path to Home Buying with Unison

As the familiar saying goes, “Good things come to those who wait.” But how about waiting 14 years to be able to put a down payment on your first home. According to the Unison Home Affordability Report, that’s the average length of time it takes someone earning the national median income ($61K) to save for a 20% down payment on a median-priced home.
This means that many prospective homebuyers–especially millennials–won’t realize the dream of owning a home until they’re well into their 40s

Get a jump start on your life’s journey If you could own a home sooner, how would your life plan change? In a January 2019 survey of 1,000 Americans conducted by OnePoll, one in three millennials said they altered their life plan because they couldn’t afford a down payment on a home. Another 22% said they put off getting married for the same reason. One in four (24%) said they delayed having kids until they could afford a down payment.

When baby boomers (born between 1946 and 1964) and Gen Xers (born between 1964 and 1981) were 35, more than half already owned homes. In 2016, by contrast, only 34% of 35-year-old Americans were homeowners.

Buying a home is faster–and smarter–with Unison

If you don’t want to wait, what are your options?

We designed three path-to-purchase scenarios to help answer this question. First, we modeled the paths to purchase for today’s typical millennial homebuyer and baby boomer homebuyer. Then, we used the Unison Homebuyer product to show how a co-investment can add to a buyer’s down payment so they can avoid private mortgage insurance (PMI) and lower their monthly payments. Both models are based on the national median income of $61K and the national median home price $209,770, as of 2018.

We made two assumptions: 1) Both buyers are college-educated and saddled with student loan debt; 2) Their starting salary will increase over time.

Let’s take a look:

Path 1: Typical baby boomer homebuyer in 1975
In 1975, the typical baby boomer was between 21 and 22 years old. Back then, the median age for men to marry was 21, and for women, 23.5, and they typically had their first child at 23.

When boomers went to college, they were expected to graduate in four years. The median household income in 1975 was just under $12K annually and the median home price was $26,624. So if you look at the time of graduation, median salary and typical marriage age, baby boomers were able to accumulate enough money to put a 20% down payment on their first home around the age of 30. This means they took nine years to save for it after leaving college.

Path 2: Today’s millennial homebuyer without Unison
The average millennial is 23, graduated from college in 2018, carries an average student loan debt balance of $29,800 and, according to the National Association of Colleges and Employers (NACE), earns an average starting salary of $50K. (At most public universities, only 19% of full-time students earn a bachelor’s degree in four years.)

They’ll get married around age 28 (the U.S. male’s median age when they’re first married is 29.8, for women, it’s 27.8) and have their first child right after they turn 30.

If you look at millennials’ time of graduation, median salary and typical marriage age, it takes them 14 years to save for a 20% down payment on a median-priced home. They became first-time homeowners at age 37 (seven years after their first child was born).

Path 3: Today’s millennial homebuyer with Unison
Today’s millennial college grads have an opportunity to mirror the path of a typical 1975 baby boomer. With a Unison co-investment, they can buy their first home at age 30 even if they’ve saved just 5% for a down payment. That’s half the time it would normally take.

Unison will invest the rest – in exchange for a portion of their home’s appreciation when they sell – to get them to a 20% down payment. There’s no extra debt, interest or monthly payments. When they profit on the sale of their home, we profit too. If their home loses value, we share in the loss.

Then maybe they won’t have to put off other major life decisions until their late 30s or early 40s. Maybe they can start living their best lives sooner rather than later. Maybe, with Unison, good things can come to those who don’t need to wait.

Follow the path to home ownership with Unison, and see how it compares to the homebuying journey of baby boomers.

CLICK HERE TO VIEW THE FULL "Path to Purchase" INFOGRAPHIC REPORT