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Can I Afford To Divorce In This Housing Market?

Over the last couple years, Seattle has seen an extreme rate of growth in housing prices.

Right now we are leading the nation in housing price growth. While this may be good for sellers and landlords, it is making it harder and harder for buyers and renters. One impact is that some people in the area are questioning whether they can afford to divorce, given how hard it may be to find new housing if they move out.

Divorce is about ending a relationship. It should not be about affordability. If you need out, you need out.

Here are some options to consider if you are concerned about the cost of independent housing:

  • Nesting. While this may not be a long term solution, and certainly won’t work for every couple, some couples who want to avoid disrupting the children choose to rent a small apartment nearby and take turns between the two residences. The parent who is scheduled to be parenting stays in the main home while the person who is on “parenting break” stays at the apartment. This allows them to keep the children in the family home and pay less for a smaller residence that only one person is using at a time.
  • Co-housing. Sharing residences can take many forms. There is the traditional taking in a roommate, but there are also options like purchasing a home with separate rental space (such as a duplex) and living in one part while renting out the other. Similarly some homes may have space, such as a mother-in-law apartment, that are easily converted into separate living space for a second person or family. Co-housing can also mean several people purchasing land together but building separate housing on it. There are several established co-housing communities in the Seattle area.
  • Downsizing. You may find that without your partner living with you, you can get by with less space, and that you can find something affordable if you are willing to accept that tradeoff.
  • Relocating. This does not need to mean moving to Nebraska, it may just mean getting a bit further out of the city. You may be able to find significantly better prices in Edmonds than in North Seattle, for instance.
  • Tapping equity. The upside of the growth in housing prices is that many couple have acquired significant equity in their existing homes. There may well be enough equity to provide a down payment for both parties on new less expensive residences. Even if one party is going to stay in the existing family home, it may be possible to refinance the home in order to take out equity for the other party to get into new housing.
  • Shifting investments into housing. Real estate can be a good investment. There may be other investments that can be tapped to shift the funds into housing. You may even be able to take money out of retirement plans to put into housing.

When considering options like these, it is important to get good financial advice. You may want to find a financial advisor who has specific training in divorce financial planning. A CDFA is a person who has completed training as a Certified Divorce Financial Analyst. One list of people who do this kind of work in the Seattle area can be found at the King County Collaborative Law website.

The process of developing workable housing options may be easier if both parties can cooperate in joint problem solving, finding solutions that will work for both.

If that sounds like it may be an option for you, then look into Collaborative divorce process. This is an option we offer at Seattle Divorce Services, and we can give you the names of other Collaborative lawyers for your partner as well. The Collaborative team typically includes a Financial Specialist who can help both of you look at ways of handling the difficult housing market, including whether it makes sense to hang on to an existing residence versus cashing out.

One final point to consider is that if refinancing may be part of the equation, you may find that it is easier to to refinance before a divorce action has been filed. Your financial advisor may be able to give you more information on that  issue, and even help you connect with a mortgage broker who is experienced in divorce related financing.