Young homebuyers are twice as likely to use family money for a down payment as they were five years ago, according to a new report from Redfin. In fact, 36% of Gen Zers and Millennials who plan to buy a home expect to receive support from family to help fund their down payment.
An additional 16% of Gen Zers and Millennials say they’ll use inheritance money as a down payment, and 13% plan to live with their parents or other family members to help save for a down payment on a house.
How much does it cost to buy a new home?
That’s because the rising costs of purchasing a home — up nearly 40% from before the pandemic — are making it incredibly hard for young people to come up with a down payment. When you also factor in high student loan payments, rising rents, inflation, mortgage rates and the overall cost of living, even the starter homes become unaffordable.
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“Because housing costs have soared so much, many young adults with family money get help from Mom and Dad even when they have jobs and earn a perfectly respectable income,” said Redfin Chief Economist Daryl Fairweather. “The bigger problem is that young Americans who don’t have family money are often shut out of homeownership.”
What's the biggest barrier to buying a home?
Among the Gen Zers and Millennials who aren’t likely to buy a home soon, lack of affordability is the most significant barrier, with nearly half (43%) of Gen Zers and Millennials saying they’re unlikely to purchase a home soon because the homes on the market are too expensive.
Roughly one-third (34%) say their ability to save for a down payment is a barrier to buying a home, followed by the ability to afford mortgage payments (29%) and high mortgage rates (29%).
- Of the Gen Zers and millennials who aren’t planning to buy a home in the near future, 16% cited a lack of financial support from family or friends as a reason.
- More than 10% of young Americans said they must pay off student loans before purchasing a home.
- Of those saving for a down payment, 60% plan to save directly from paychecks.
- About 40% plan to take a second job to save for a down payment.
To view the full report, including charts and survey methodology, visit:
https://www.redfin.com/news/gen-z-millennial-down-payment-family-help
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