Slow housing market complicates divorce |
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Putting off the divorce
Sometimes the divorce has to be put off -- at least for the time being.
Hughes says she sees the issue come up with clients. "I think we're seeing people who are not divorcing. Some people
cannot leave comfortably at this time."
But Nancy Zalusky Berg, a family-law attorney in Minneapolis, says not divorcing may not be a realistic option for some
couples, despite their financial hardship. "What we're having is two people staying in the house because they can't afford two places.
They're staying together in the same place, with a fair amount of difficulty, including threats of domestic violence and incidents," she
says. "Right now is a very ugly time in my business."
Houses are hot potatoes
It used to be that divorcing couples would vie to be the one who kept the home. Women, in particular, often fought to remain in the house
where the couple's children had grown up. That wasn't always the savvy thing to do financially, especially if the ongoing expenses (property
taxes, insurance, utilities and repairs) proved to be too much to handle on her income alone. And often women would give up other valuable
assets in the divorce settlement, such as pension benefits, in order to win the house. That seems to be changing.
"Houses have become like hot potatoes," says Berg. "Nobody wants that on their side of the ledger. They might want the house,
but they don't want it at the value that's being agreed to, or because they don't feel it's a safe investment."
Hughes says women seem to have less attachment to the family home now, which may be a positive change, reflecting their
understanding of how they may be burdened by ongoing expenses. "I hope it's because they have learned," she says.
"More and more, neither person wants to live there," she says. Especially when couples are ending a long-term marriage, both
may wish to start fresh, with fewer belongings, including the home. "People want a new start with much less," she says. "In some cases neither
wants any of it. It's a past life."
Recommendations for warring spouses
Experts do have some recommendations for couples struggling with a marriage that is ending -- and homeownership that is lingering.
Most important, they say, is to pay sharp attention to the valuation of the home when dividing assets. Both spouses need to
be honest about how low that home's resale value may be now, given the current weak market. If it is valued too high, it distorts the
distribution of assets and liabilities from the marriage.
Divorcing spouses may have to sell some of their investments to generate cash to pay off the mortgage on their former homes,
and allow each to move on separately.
Spouses who wish to remain in the home after a divorce need to be realistic about the ongoing maintenance costs associated
with living there. Without two incomes -- and the economies of scale that come from two people sharing living expenses -- the home may be a
serious long-term drain on that person's finances.
What no one knows is whether some couples who would have divorced, but who put off the move because of the economy, will
simply delay the inevitable or remain married for the long term.
There may be some who try harder to work it out, says Berg. "I certainly encourage that. I hate to see people get divorced,
especially young couples, because they're mad at each other."
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