Regardless of your stance, the Supreme Court ruled in favor of legalizing same-sex marriage, and the effects will be seen over time on our economy and in real estate. Lesbians, gays, bisexuals, and the transgender (LGBT) community will now be able to hold title for their home as tenancy by the entirety.
Sherry Chris, CEO of Better Homes and Gardens Real Estate, said in a statement after the ruling “As with other momentous social landmarks, this progress will trigger key milestones along the path to homeownership.” Sherry goes on to say that the LGBT community is “a powerful market segment that represents an estimated buying power of $840 billion.”
In addition the the potential affects caused by Tenancy By The Entirety (read more below), the law could have other potential affects on the economy.
First off, our president had this to say about the subject:
“This is one of the Supreme Court’s most significant decisions in the past century. It’s up there with Brown v. Board of Education and Roe v. Wade, not only because of the social implications and the validation of so many people’s equality but also because of the positive economic impacts. Before this decision, gay and lesbian couples had to jump through expensive and complicated legal hoops to participate in even the most basic economic activities. Creating an easier and more fluid means to accomplish things like buying houses, borrowing from banks, protecting estates, filing joint tax returns and enforcing parental rights will encourage more couples at every socioeconomic level to participate in consumerism in every possible way.”
“Now that gay and lesbian couples don’t have to seek legal counsel to create and protect joint tenancy ownership, more are likely afford to buy houses together. Now that spousal inheritance is automatic for them more couples are likely to contribute towards retirement plans and long term joint investment strategies. There are even basic economic boosters like the consumer spend and sales tax associated with weddings, adopting children and raising families and a myriad of other fundamental human behaviors that enhance the economy in ways that we don’t yet realize. When you enhance people’s rights to operate on an even playing field in society then the impacts of that inclusion are felt on every level. Social and legal progression accomplished through this decision will encourage the basic feeling of equality for gay and lesbians, and that alone will increase the positive economic and social contributions these individuals bring to us all. There may still be resistance to issues like gay marriage but the overall value added to people’s lives and to society at the economic level creates a pulse of positive expansion that will help the country flourish over the long run.”
According to LegalDictionary.com, Tenancy by Entirety is:
a type of concurrent estate in real property held by a Husband and Wife whereby each owns the undivided whole of the property, coupled with the Right of Survivorship, so that upon the death of one, the survivor is entitled to the decedent’s share.
Like joint tenancy, this means both spouses own the property and when one spouse dies, the surviving spouse becomes the property’s sole owner. Unlike joint tenancy, a common way to handle joint homeownership before last week’s court ruling, under tenancy by the entirety the home is more fully protected from creditors.
Essentially, this just means that LGBT couples can now fully and legally own property together, whereas before they were forced to make other arrangements. The couples’ ability to own property together and to become legally married has several potential effects on the housing market.
Mortgage and Financial Stability
First of all, the ability to jointly own a property and qualify for a mortgage will now be available to more people. With the community’s significant buying power, this could have huge effects, especially in Houston where inventory is already low.
Better Homes and Gardens Real Estate and the National Association of Gay and Lesbian Real Estate Professionals conducted a survey recently showing that 80% of LGBT respondents felt that marriage equality ruling will give them more financial confidence.
Additionally, one of the greatest tax benefits of home ownership is the tax deductibility of interest (subject to certain limits) on a home mortgage. Now, same-sex spouses who own a home and have a mortgage together will be able to claim the home mortgage interest tax deduction jointly on their joint tax return.
Larger Pool of Qualified Buyers
Obviously, more couple qualifying for a mortgage and having more financial stability means more buyers in the marketplace, and gay couples in particular have significant buying power. This is good news for sellers. The low inventory with a larger pool of buyers perpetuates Houston’s current status as a seller’s market, where sellers have the advantage and attain higher prices for their houses. Low inventory has already driven prices up in Houston in recent years, and having new buyers without having caught up in inventory will only prolong the “problem”.
Potential Shifts in Cities and Suburbs
With more couples focusing on stability and family life, there could be a noticeable shift from cities to suburbs.
Research shows it isn’t uncommon for gentrification to follow when more gay couples begin settling down in a community, so this shift could mean improvements in value in certain Houston neighborhoods.
“Economists have long speculated about the effects of “gayborhoods” on everything from diversity to gentrification to housing prices. One common theme of this analysis is that neighborhoods with a higher than average density of gay residents are by definition more diverse and open-minded, with a wider range of racial, ethnic, and socioeconomic groups as well. Another common argument is that gays often pioneer the revitalization of disadvantaged, crime-filled urban neighborhoods – and their presence can be seen as an early marker of gentrification and a precursor to a jump in housing prices.”
Good News Overall
This is all good news for Houston home sellers – gentrification and more buyers in the market both mean higher prices for homes. This is also good news for lenders and builders, because there will be more qualified home buyers with significant buying power entering the market.