US couples in a buyer’s market are purchasing homes before setting a date for the wedding
CHUCK Haberstroh and Jacque Horelik went to high school together in Westport, Connecticut, but they did not know each other then. They met by chance during college, when she visited a mutual friend at Lehigh University, where he was a student. A few years later, they crossed paths back home in Westport and went on a date to a cool pub and restaurant. Things were a bit on and off for a while, but then they began to get serious.
He lived in a house in nearby Norwalk with a bunch of male buddies; she moved to the place next door with her sister and a couple of friends. She started spending all of her time at his place, so she ditched her room and moved in with him. A few months later, they signed a lease on a small apartment of their own.
He was in his late 20s, she was two years younger. They had been together for two years. They made each other laugh, they liked each other’s friends, they loved each other’s company. And so they knew – as everyone seemed to be telling them – that it was time.
To buy real estate.
Two distinct forms of desire – the carnal type and the kind that involves granite countertops – have been known to intermingle, but perhaps never more so than now.
New York and its environs have always been places where real estate can drive relationships, for better or for worse (think of the marriages that have lingered for far too long because neither spouse can afford to move out of the Classic 6). But the peculiarities of the housing market today are leading more couples to ponder the question ‘Should we buy?’ before they settle the question ‘Should we commit?’ Mr Haberstroh, now 30 and a vice-president of CastleKeep Investment Advisors in Westport, said that the market dictated which question he and Ms Horelik tackled first.
‘When the market started to turn in the buyer’s favour,’ he said, ‘we decided we had to take advantage of that.’ On Oct 30, they closed on a three-bedroom Cape Cod-style cottage in Fairfield, Connecticut, with hardwood floors, a front porch and a back deck on a pretty corner lot. They got it for US$430,000, which was US$29,000 less than the asking price.
They had been assuming for a while that one day they would, probably, get married, but for one reason or another the engagement had not happened.
‘My whole thing was with this market, get the house – the one you want and love – first,’ Mr Haberstroh said.
That wasn’t entirely her whole thing. ‘I was itching to get engaged before we bought the house,’ said Ms Horelik, 28, a teacher who works with special education students. ‘Chuck definitely felt the pressure from me and both of our families.’ But, she added: ‘Now I see why he wanted to wait. He saw the prices and rates were dropping, and we realised we may never see such a buyer-friendly environment again.’
Startlingly low mortgage rates
Other couples are also finding it difficult to resist the allure of startlingly low mortgage rates, fallen prices that may be about to turn up again and expiring tax breaks.
‘There are just so many things you can lose out on’ if you wait, said Elaine Matthews, 27, an actress and dancer who is in contract to buy a condominium in Greenpoint, Brooklyn, with her boyfriend of 16 months, Sean MacLaughlin. They hope to close on the property – a brand-new 1,200 square foot ground-floor duplex with a backyard, a deck and a white picket fence – at the end of February or the beginning of March.
Ms Matthews and Mr MacLaughlin, a 31-year-old actor, met while performing with the touring company of The Phantom of the Opera, and have spent most of their relationship on the road, living in hotels.
‘New York rents are very high and you never see that money again,’ Ms Matthews said. She went on to list the benefits of buying: ‘We got a great mortgage rate, 4.75,’ she said. In addition, owners of units in new developments in New York City can take advantage of a programme that phases in property taxes over a period of 10 years. And then there’s the federal tax credit for first-time home buyers, to expire on April 30, which will provide several thousand dollars in income tax relief.
‘We will eventually get engaged and get married,’ Ms Matthews added. ‘We’re kind of like, let’s get this apartment now, then let’s make it official.’ Mr MacLaughlin said: ‘We were talking about getting married and I said, ‘Wait a minute, if we just put off the ring, we’ll get the apartment first’.’
At US$522,000, the apartment costs a good deal more than most rings, but Ms Matthews said that the price was about US$60,000 less than what a similar unit in a complex by the same developer went for two years ago.
One of the most compelling forces motivating many couples right now is the first-time home buyer tax credit, which offers federal income tax relief equal to 10 per cent of the purchase price of a home – capped at US$8,000 – for couples earning less than US$150,000 and individuals earning less than US$75,000.
Pete Flint, the chief executive of Trulia, a real estate search engine, pointed out that people who have never bought a home make up a demographic tending towards the young and unmarried. The credit, a part of the broad economic stimulus package enacted last year, was to expire last November, but Congress extended it until the end of April.
That deadline is lighting a fire under some couples in the serious, or almost- serious, stages of a relationship. They worry that if they don’t act now, they may squander the best property-buying opportunity that they will have for a while. There are also signs (or at least a feeling in the air) that the housing market could be picking up (including word that this may be a good year for Wall Street bonuses).
Mr Flint said that trulia.com had received numerous e-mail messages from unmarried couples asking about the logistics – and wisdom – of buying a home together. Many of the queries are about the first-time home buyer tax credit, and how or whether it can be divided between people whose marital status doesn’t allow them to jointly file a tax return.
(The answer from the Internal Revenue Service: Only one of the two people can claim the tax break if they are unmarried at the time of the sale. It cannot be divided, even if the couple marry later in the year.)
‘Tenants by the entirety’
Real estate lawyers said that there are more complications for unmarried property owners who part ways than there are for married property owners who divorce – and a less clear process for resolving them.
‘By default, our laws are suited for married couples acquiring assets,’ said Luigi Rosabianca, a real estate lawyer in Manhattan.
Under New York state law, he explained, a husband and wife are considered ‘tenants by the entirety’ when they buy property. That ensures, among other things, that the property will automatically transfer to the surviving spouse if one person dies.
‘If you are not married, you have to fill in the blanks,’ Mr Rosabianca said. Towards that end, he recommended that unmarried couples consider signing what amounts to a pre-prenuptial – legal agreements specifying the unknowns, including ‘who contributes what percentage of the expenses, mortgage, taxes, common charges, utilities’. He added: ‘You also have to account for capital gains – what percentage goes to whom.’
And for Mr Haberstroh and Ms Horelik, both the real estate and the relationship have now fallen into place, to the delight of Ms Horelik’s family, who are of the wedding-before-house school.
The first night they slept in their new home, they got engaged. They are hoping for a late-summer 2010 wedding, but have not set the date.
‘Between moving in and outfitting the house,’ Mr Haberstroh said, ‘we’ve had a hard time finding time to really make progress on that front.’
Source: Business Times, 5 Jan 2010
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