About 38% of under-30 first-time homebuyers relied on family assistance or inheritance for their down payment, indicating the significant support younger buyers receive, according to research cited by Redfin’s chief economist, Daryl Fairweather.
In Q1 2023, seniors aged 65 and above held over $11.6 trillion in home equity, based on estimates from the Reverse Mortgage Market Index (RMMI), a joint project by NRMLA and RiskSpan. This underscores the significant housing wealth accessible to seniors, complementing the Redfin survey data.
Fairweather observed the rarity of young individuals affording homes, emphasizing that senior Americans (65+) are twice as likely to own homes compared to those under 35. Many young homebuyers received family assistance. In the Redfin survey, 509 respondents under 30 revealed that 23% used family cash gifts and 21% relied on inheritance for their down payments.
Fairweather’s cited research also indicates that a parent’s homeownership status is linked to the probability of their child achieving homeownership.
Economists from The University of Chicago discovered that offspring of parents who own homes have a considerably higher likelihood of becoming homeowners themselves in adulthood. Additionally, a 2021 Redfin survey of approximately 1,500 homeowners revealed that 79% of present homeowners had parents who owned homes, and 67% had grandparents who were homeowners.
She also pointed out that the timing of when a family achieved homeownership contributes to disparities in ownership rates among different demographic groups, including racial disparities.
Many young homebuyers today have grandparents who purchased homes before the Fair Housing Act was enacted. During that time, it was legal to discriminate against homebuyers based on factors such as race, religion, national origin, disability status, or family status. Since homeownership tends to continue through generations, the disparities of the past continue to have an impact.
In a survey conducted earlier this year by the Society of Actuaries (SOA), it was revealed that 66% of individuals from the baby boomer generation, aged between 58 and 76, have had their retirement savings objectives affected by their intention to save money and provide financial assistance to their grandchildren for significant expenses, such as education and housing.
