Divorce is never an easy process, but it can be fast even when it tackles some of the most complex topics like property or asset division.
Divorce mediation, for example, can save the couples the hassle of battling bitterly at courts and dragging the proceedings for years.
However, couples still need some sense of reality to help them better decide for themselves and actively participate during mediation. One of the possible implications of the divorce is in the property’s value in the market.
Does it increase or decrease?
What Happens to the Property Value After Divorce?
One can answer this question in many ways. It could be according to where the couple lived. In places like California, they may see their home value plummet after a divorce. This may be because of the sheer amount of legal wrangling involved in getting divorced and selling one property only to buy another separately.
Compared to single homeowners, joint owners with children have more assets divided during a divorce settlement. Some of these assets include real estate properties, business interests, bank accounts, and investments. It’s also harder for joint homeowners to retain equity if they’re splitting homes into half instantly after getting married.
A 2011 survey completed by the American Academy of Matrimonial Lawyers revealed that more women are receiving primary residential custody and fewer women are receiving child support. These trends are most evident with high-net-worth individuals getting divorced.
Other factors that may impact a home value during or after divorce include:
1. Relationships with Mortgage Lenders
Mortgage lenders may be reluctant to offer loans to joint owners if one party is going through a divorce because it could affect their ability to repay. Under these circumstances, a lender would have to consider the risk that one owner might abandon a mortgage and leave a less-solvent partner on the hook for debt repayment.
Therefore, divorce could cause problems with meeting monthly payments and reduce home equity in some cases. However, this does not apply to all states, as rules governing marital property vary from place to place.
2. Habits Between Married and Single Homeowners
The decrease in home value may also stem from the idea that married couples usually make better buyers than single homeowners, especially when purchasing more expensive properties.
According to Zillow Group Consumer Research, on average, joint owners buy more expensive houses than single homeowners. Joint homeowners also make more efficient use of the housing market as they can afford much larger homes.
Meanwhile, divorced people might not have as much money as before, which would affect their ability to pay for bigger properties or retain as much equity as before. Single buyers also tend to invest less in housing than those who have just been married especially if they’re looking for something more affordable. This means they’d buy relatively cheaper houses, which does not reflect positively on market prices.
3. Loss or Lack of Jobs and Income
Another factor that could affect home devaluation is job loss or a lack of income. For example, one of the spouses, usually women, find themselves out of the house with no employment or income after taking care of the household for years.
Many women also struggle to return to the workforce. In one research, these ladies are half as likely to get a job interview than moms who may have been laid off. Fewer than 5 percent of them would receive callbacks from employers.
Compared to women, men are more likely to receive a higher income than women. They may also be able to retain their jobs as the physical custody of children often ends up with mothers. However, their take-home pay may still decrease after paying alimony or when they need to provide child support.
In any case, homeowners have nothing to worry about if they’re still employed and hold separate bank accounts from their spouses. This would lessen the risk of losing a house in a divorce as either of the spouses can access their personal funds when necessary.
Of course, this doesn’t mean that they won’t have to find somewhere else to live after the divorce if they can’t afford their current homes. In these situations, the court will consider all factors, such as the couple’s standard of living, when it came time to divide marital property.
Divorce is never easy, especially when dividing up shared property and finances between former partners. Not only does it leave two people feeling bitter toward each other, but there is also a lot of uncertainty involved in moving on with life afterward. As a result, many people seek various ways to change their family law proceedings after getting married.
However, people may not be aware of how this could affect the value of their homes, especially if they were joint owners before filing for divorce. Even though there are several states where divorces don’t affect home prices at all, divorce proceedings can still lead to issues with payments and equity in some cases, which is why homeowners should know about these consequences ahead of time.