With home prices hovering at record highs and mortgage rates locked above 6%, the dream of homeownership is becoming a family affair.
For many Gen Zers, the youngest generation entering the housing market, securing a home without help with a down payment is essential.
Eighty percent of Gen Z homeowners received financial assistance to secure the down payment on their current home, according to a recent LendingTree survey of first-time homebuyers.
In comparison, 56% of millennials and 12% of baby boomers required similar financial backing to purchase their first properties, LendingTree found.
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Moving the Goalposts on Young Buyers
Gen Z is entering the workforce and the housing market during an exceptionally hostile economic climate. Home prices are escalating at twice the rate of income growth, while persistent inflation has eroded starter-salary savings, according to online mortgage industry publication National Mortgage Professional.
Compounding the issue is that the amount of cash required to close a deal has ballooned. The median down payment hit a record high of $30,400, with some high-cost regions requiring even more, according to Realtor.com.
Faced with these numbers, family members are stepping in to fill the void. According to LendingTree:
- 27% of Gen Z buyers received down payment assistance from their parents.
- 27% received financial help from other family members or close friends.
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The trend is also shifting parental expectations. Another survey from Veterans United Home Loans found that 57% of parents have already provided or plan to provide homebuying assistance, ranging from down payments and closing costs to home furnishings.
“These early expenses are often what stand between prospective buyers and actually getting into a home,” Veterans United Vice President of Mortgage Insight Chris Birk told Realtor.com. “That’s why more parents are stepping in to help bridge that gap.”
The Down Payment Dilemma
For many, the generational wealth transfer is the only path forward. More than 1 in 3 recipients of family aid said they could not have purchased their home without it — a sentiment that rose to 44% among female respondents, LendingTree reported.
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Beyond crossing the purchase threshold, the cash injection has had significant structural benefits for the buyers’ loans, helping 43% of recipients qualify for a mortgage and lowering monthly payments for 33% of those helped by family members.
Despite the practical benefits, the reliance on family cash has a psychological toll. LendingTree found that 21% of Gen Z homeowners who accepted financial …
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