According to Harvard Business Review, the United States has been experiencing a severe housing crisis for “a long time.” A number of factors have made it more challenging than ever to purchase, own, and maintain a residence in the United States – and this issue could be particularly challenging for spouses emerging from divorce. How can spouses secure reliable housing in a tight market with considerable competition?
How Serious is America’s Housing Crisis?
The United States is a mosaic of many separate housing markets spread across the nation, and it is challenging to make sweeping generalizations about all US real estate. That being said, a number of common trends are emerging – and some of the most pressing issues are federal in nature.
Perhaps the most obvious example is the Federal Reserve interest rate policies. Although the benchmark interest rate has been declining, it is still relatively high – and this makes mortgages more expensive.
This issue may disproportionately affect divorcing spouses, as these individuals may need to re-enter the housing market and obtain new mortgages for the first time in many years – perhaps even decades. While interest rates change, it could be more expensive than many people realize when getting a new mortgage. In contrast, the spouse who gets to keep the family home may be able to keep an interest rate obtained many years ago – before the current cycle of economic tightening.
These inequities may need to be addressed during collaborative law, mediation, and other private negotiations. Even if a spouse appears to emerge with an equal share of the family home, they may face a more uphill battle when moving out. In contrast, an ex who keeps ownership of the residence may find it much easier to continue making the lower mortgage payments.
Renters Face Even Worse Pressures
This is an issue that affects spouses from all walks of life. Even if a spouse plans to rent after divorcing instead of buying, they face the same basic challenges. Landlords have been increasing rents faster than the official rate of inflation in the United States. Living costs are especially unaffordable in certain states and cities. According to official metrics, someone is considered “cost-burdened” when they spend more than 30% of their income on living costs. These costs might include rent, mortgage payments, utilities, insurance, repairs, and so on.
Many spouses do not qualify for mortgage loans, even after emerging from high-net-worth marriages. These individuals may have no history of earning income, and they may have acted as homemakers during the entire marriage. With no income history to work with, banks may be highly reluctant to provide one of these spouses with a loan. This may force them to rent, sparking a downward economic spiral with increasing costs over the years.
These factors could be particularly challenging for those emerging from “gray divorces.” It could be even more challenging for older individuals to get housing loans, regardless of their income history. As MarketWatch notes, gray divorces may cause both spouses to sell their family home – with neither party having enough cash left over to purchase their own residence.
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