Young consumers are increasingly looking to family members for help buying homes

Aspiring young homeowners are increasingly relying on their parents’ bank to help them buy property, new research has found.

more than one third Generation Z and Millennials A report from Redfin shows that people who plan to buy a home in the short term want to use gifts from family members in part to help with their down payment. This proportion is 36%, double what it was five years ago,” said the online real estate agent.

In a 2019 poll of Millennials, 18% said they were asking family members for assistance, up just 5 percentage points last year to 23%.

Despite the surge in family support, Gen Z and Millennial buyers are, for the most part, trying to do their part. Among consumers of the same age group, about 60% of consumers regularly save their income to pay down payments, and 39% of them also use savings deposits to pay down payments. Redfern found they were looking for a second job to help them achieve their goals of homeownership.

Selling equity investments was mentioned last on the list of possible financing options by 29% of respondents, while 22% said they would consider early withdrawals from retirement funds.

Rising share of consumers using family gifts to gain advantage Points to larger affordability issues That makes it impossible for many people to even buy a starter home, said Daryl Fairweather, chief economist at Redfin.

“With housing costs soaring so much, many wealthy young people are receiving help from their parents even if they are employed and earning a very substantial income,” she said in a release.

“The bigger problem is that young Americans without family capital are often excluded from homeownership. Many of them also have good incomes, but they can’t afford a home because they’re in the same position as their generation. “The disadvantage is: they don’t have a lot of family funds to draw on. “

A heightened focus on housing challenges, particularly those related to difficulty financing down payments and closing costs, has captured much of the mortgage industry’s attention Buyer assistance resources from past monthsHousing agencies nationwide added 135 projects last year, a 6% increase from 2022, according to Down Payment Resource.

But consumers Sometimes the benefits are not fully realized To address some of the information gaps, Freddie Mac A portal was also revealed Last fall, helping aspiring homeowners and their mortgage lenders find down payment assistance they might qualify for.

As of January, there were nearly 2,300 such programs across the country, offered by groups including state housing agencies, municipalities and nonprofits, Down Payment Resource said.

In March this year, two financial institutions announced plans to increase assistance to homebuyers. Atlanta-based Citizens Trust Bank has launched a new down payment assistance program that provides qualifying renters with down payment assistance of up to $2,000 to help reduce the initial cost of purchasing a home.

Meanwhile, the Federal Home Loan Bank of Chicago said it would increase the amount it provides to member institutions in the Midwest to $1 million to fund its own homebuyer grant program. The new total represents a 43% increase over the 2023 limit of $700,000 and the overall budget for the Chicago Bank Down Payment Assistance Program now exceeds $39 million for eligible first-time mortgage borrowers when financing through member banks or their partners. Will receive up to $10,000 in financial assistance.

although House price growth has slowed recentlyRedfin says current home cost levels are the No. 1 reason younger consumers choose not to buy a home in today’s market. In its survey, 43% of non-market segments cited this as a factor, followed by 34% who said being unable to save for a down payment was deterring them. Challenges in keeping up with mortgage payments and perceived high interest rates were cited by 29% of respondents.

Housing affordability may decline appear in public view This year, President Biden appears poised to make it a talking point during the campaign season. His recent State of the Union address, Biden is calling for mortgage tax credits, title insurance alternatives and down payment assistance of up to $25,000 to help address affordability challenges facing the country.

Housing issues could influence the final presidential election outcome.In a previous Redfin analysis, its researchers found Majority of U.S. households say housing affordability could affect Who they voted for this year.

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