Homeowners are Seeking Roommates to Help Pay Their Mortgages
Buying a home may seem like a distant dream for many in today’s cutthroat housing market. That is, unless they’re willing to share that dream with a roommate or two.
With the average U.S. mortgage rate above 5% and home prices at record highs, homeownership feels increasingly out of reach, particularly for young, first-time buyers. To make it work, some are renting out rooms or basements and using the extra income to help offset their costs.
The practice, which has long been accepted in the U.K. and other European countries, is spreading to the U.S., where the number of buyers who considered renting out a portion of their homes for rental income rose to 31% in 2021 from 24% two years earlier, according to real estate website Zillow’s consumer housing trends report.
“That increase in homeowners becoming residential landlords is consistent with the trend we see of buyers coming from a younger generation of side-hustlers aging into the housing market,” said Zillow economist Manny Garcia.
For some, the extra rental income is the only way they can afford to keep up with their mortgage payments and bills that are going through the roof thanks to roaring inflation. That’s why 24-year-old Josh Bowser and his now-fiancé went into the housing market looking for a property with additional rooms to lease.
Bowser knew he had to be strategic with his finances after graduating from college during pandemic-driven economic turmoil and a tight housing market. By living frugally, the young couple saved enough to put a down payment on a three-bedroom townhouse in a North Atlanta suburb in June 2021.
Their $2,200 monthly mortgage cost would have been a “stretch” with their combined incomes, Bowser said. So they found a tenant on Facebook Marketplace who pays $1,000 in rent to live in the second bedroom, subsidizing 45% of their monthly housing bills.