Survey Reveals Over 1/3 of Millennials and Gen Z Rely on Parents for Home Down Payments

Home Down Payments: Everyone occasionally needs a little assistance. Also, people in this housing market require assistance from their parents. According to a Redfin-commissioned survey, over one-third of millennials and Gen Zers who intend to purchase a home expect their parents or other family members to contribute to their Home Down Payments in the form of cash.

In recent years, there has been an increase in the proportion of millennials who get home down payment assistance from their family. By 2023, a whopping 23% of millennials will have made their down payment using monetary gifts, up from 18% in 2019.

Gen Zers and millennials are using gifts beyond cash. According to Fox Business 13% intend to live with their parents or other family members to save money for a down payment, while some intend to use their inheritance as funds for a down payment.

“First-generation homeowners are losing ground to nepo-homebuyers. Redfin senior economist Daryl Fairweather stated, “Many young adults with family money get help from Mom and Dad even when they have jobs and earn a perfectly respectable income because housing costs have soared so much.”

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Working and saving is the most popular way for other younger purchasers who don’t have families who can afford to give them money for a down payment to finally afford a down payment. In the Redfin survey, around 60% of participants stated they save money straight out of their paychecks, and 39% probably work two jobs to pay for a house down the road.

“The bigger problem is that young Americans who don’t have family money are often shut out of homeownership,” said Fairweather. “Many of them earn a perfectly good income, too, but they aren’t able to afford a home because they’re at a generational disadvantage; they don’t have a pot of family money to dip into.”

Prices for starter homes have increased by 45% since the outbreak.

Because the cost of purchasing a home has increased dramatically in recent years, especially for starter homes, younger generations find it increasingly difficult to afford homes.

According to a Redfin research, the average starting home sold for $243,000 in June of last year, up 2.1% from the previous year and 45% from before the epidemic.

In order to purchase a first home, a first-time buyer’s annual income needs to be approximately $64,500. That is an additional $7,200 over the previous year. This increased income need is a result of rising mortgage rates and housing prices.

According to Redfin Senior Economist Sheharyar Bokhari, “buyers looking for starter homes in today’s market are on a wild goose chase because there’s no such thing as a starter home anymore in many parts of the country.”

“The combination of rising rates and rising prices has made the most cheap homes for sale unaffordable for those on a tighter budget. This keeps a large number of Americans from participating in the housing market at all, which keeps them from generating equity and, eventually, long-term prosperity.”

The drop in existing home sales in March indicates that homes are still hard to afford. Sales fell 4.3% to 4.9 million, according to Fannie Mae.

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The sales increase that occurred in February was negated by this decline. Buyers are retreating from the market as a result of rising mortgage interest rates and persistently high property prices.

Listings are increasing now that spring shopping season has arrived, despite declining sales. At 1.11 million, the proportion of available dwellings increased by 4.7%.