As the housing market continues to navigate through soaring prices and economic challenges, an interesting trend is emerging among young homebuyers. With the dream of homeownership growing increasingly difficult, more millennials and Gen Zers are turning to their families for financial help, especially when it comes to gathering enough money for a down payment.

A Growing Reliance on Family Funds

According to a recent survey conducted by Redfin in February 2024, a significant 36% of potential young homebuyers expect to receive a cash gift from family to fund their down payment. This reliance on familial support marks a noticeable shift from previous years, where only 18% of millennials reported using family money in 2019. This number has steadily risen, reflecting the growing financial hurdles faced by younger generations seeking to buy homes.

The Financial Landscape for Young Buyers

The survey highlights a broad spectrum of strategies that young Americans employ to cope with the high costs of entering the housing market. While 60% save directly from their paychecks, and 39% take on second jobs, others are fortunate enough to use inheritances or live with their parents to save money. This blend of self-reliance and family support underscores the varied approaches to overcoming financial barriers.

Challenges Beyond Purchasing Power

The financial landscape for millennials and Gen Z is markedly different from that of their parents’ generation. Not only are wages relatively lower, but many young people also carry substantial student loan debt and face rising living costs due to inflation. Nearly half of the parents with children over 18 find themselves financially supporting their adult children in various ways.

Homeownership and Economic Disparity

The disparity between those who can count on family wealth and those who cannot is widening, exacerbating wealth inequality. This gap significantly disadvantages first-generation homebuyers, who, despite earning decent incomes, find themselves priced out of the market. Redfin’s Chief Economist, Daryl Fairweather, points out that this growing divide not only impacts individual opportunities but also broader economic mobility and the realization of the American Dream.

Looking Ahead: The Barriers to Entry

For many young people, the dream of owning a home remains just that—a dream. Among those unlikely to buy a home soon, 43% cite the high cost of available homes as the primary barrier, followed by challenges in saving for a down payment. High mortgage rates and the affordability of monthly payments also continue to deter potential buyers.

Navigating the Housing Market

In today’s challenging economic environment, understanding the array of factors influencing the housing market is crucial for both buyers and sellers. For young Americans, navigating these obstacles will require both innovative financial strategies and potentially, support from family resources.

Your Path to Homeownership

If you’re a young person struggling with the prospects of buying a home, or if you’re simply seeking guidance in this complex market, don’t hesitate to reach out. Together, we can explore your options and find strategies to move you closer to your homeownership goals.

Chenine Lozano
Real Estate Finance Expert
562-762-7511