Since the Recession of 2008, the United States has seen a steady increase of divorce rates. Among U.S. adults ages 50 and older, the divorce rate has roughly doubled since the 1990s. Adults 40-49 also saw an increase of divorce rates but with only 14% increase.
One possible reason the divorce rates have steadily increased over the past couple decades is the Great Recession. The recession, caused by the rampant use of subprime loans, easy credit and other financial wrongdoings triggered the mortgage crisis in 2008. Unemployment, at one point was at almost 10% of the nation. Companies were laying off employees and people were losing their income. The United States market has since evened out, with current unemployment rate being reported at 3.7 in November of 2018.
However, the housing marketing is seeing an uptick that is affecting many. During the recession, people were losing their homes as home values crashed and homeowners went underwater. Now, home values have rebounded, but people who want to buy a new home are often priced out of the market.
There are too few homes and too many potential buyers. For example, Boise, ID is seeing an unprecedented influx of people to the area. According to the U.S. Department of Housing and Urban Development, there is a demand of more than 10 times the number of homes being built right now.
The housing market isn’t much different in Reno, with a massive number of Californians moving to the area for new jobs and lower state income and property taxes, Reno is experiencing the same housing crisis. Housing inventory is tight, the interest rates have risen, and they may continue to rise. In doing so, that could push out consumers who are right on the edge of being able to afford a home.
City officials in Reno say they have approved more residential building permits than at any time in the last ten years. However, it is not enough to catch up with the demand for homes.
Now picture this, you are going through a break up or divorce with your partner and you have to find new housing. Housing prices are extremely high and there is a possibility that you are going to be priced out of every offer you make to purchase a home, and there is even strong competition in renting a home. Where do you live?
Bring in the option of cohabitation. We have previously discussed the basics of cohabitation and cohabitation agreements. Cohabitation can be when a couple, either heterosexual or homosexual, live together in a romantic relationship and/or sexually intimate relationship without formally registering their relation as a marriage. Cohabitation can also be when two parties are living in the same place but are not involved in romantic/sexual relationship.
Since 2007, the number of cohabiting adults ages 50 and older has risen 75% and this coincides with rising divorce rates among this same age group.
If cohabitation is the only logical next step, there are certain steps to take to protect oneself from unnecessary cost and litigation. A cohabitation agreement allows for the parties to clearly identify and safeguard their individual property, and to address certain rights, assets or financial obligations they have accumulated during cohabitation.
Issues of whose name will be on the lease, what expenses will be shared and what if a person does not pay his respective share within the agreed upon time frame. What happens if you want to make a joint purchase of an expensive item such as a golf membership and one of you quits paying their half the monthly dues? Credit damage can occur during these situations. What expenses of maintenance will be shared on a home where only one parties owns the home? What if the parties purchase a home together, what happens if the parties break up?
During this housing crisis, cohabiting with another party may be am option, but there are pros and cons to this arrangement as well. Make sure you, your assets, your credit and your future are protected. If you have any further questions regarding cohabitation after divorce or would like to make an appointment with Gloria Petroni, call 775.420.4221.