Lisa Mailhot | November 14, 2023
Buyers
In today's competitive housing market, aspiring homeowners are facing unprecedented challenges when it comes to affording their dream homes. Skyrocketing home prices and soaring mortgage rates have made it increasingly difficult for many to secure their place in the real estate market. If you're one of those individuals feeling the pinch, you're not alone. According to a recent Bankrate report, almost 75% of prospective homebuyers identify affordability as their primary hurdle in the home-buying process.
So, what's the solution for those who find themselves priced out of the market or struggling to come up with a hefty 20% down payment? The solution may be closer to home than you imagine. In this blog post, we'll explore the increasing trend of "nepo-homebuyers" - people who rely on their families for financial help to achieve their dream of owning a home.
As the housing market continues to evolve, many first-time buyers are cobbling together their down payment from multiple sources. While some rely on their hard-earned savings, others turn to a more privileged network – their family and friends. According to Zillow, approximately 40% of homebuyers now tap into the "bank of mom and dad," a significant increase from pre-pandemic levels.
This shift highlights the growing importance of family support in the journey to homeownership. With soaring home prices, many individuals find that their own resources simply fall short of the mark. Financial assistance from parents and relatives has become a crucial lifeline for countless prospective buyers.
To bridge the affordability gap, a growing number of younger house hunters are now classified as "nepo-homebuyers." These individuals rely on family contributions, be it a cash gift or an inheritance, to secure their down payment. According to Redfin, nearly 40% of recent homebuyers under the age of 30 used family funds to make their homeownership dreams a reality.
While it's clear that many individuals are turning to their families for support, it's essential to remember that a down payment isn't the only factor in securing a home. Jacob Channel, a senior economist at LendingTree, advises potential buyers not to be disheartened if they don't have a substantial down payment ready.
Traditional standards often dictate a 20% down payment as the ideal, but various options exist to accommodate those with different financial situations. Federal government programs, state initiatives, and offerings from banks and credit unions can provide lower down payment requirements or even the option of no down payment at all.
The challenges of affordability in today's housing market are real, but there are solutions available. Whether you're a "nepo-homebuyer" or exploring alternative financing options, the path to homeownership is still within reach. By gaining knowledge of the resources at your disposal and making well-informed decisions, you have the potential to transform your vision of homeownership into a tangible achievement, even in the current competitive real estate environment.
Reference:
Mortgage loan applications surged 11% in late April/early May, largely driven by experienced buyers trading up to larger homes as mortgage rates briefly declined. With… Read more
Childcare costs are skyrocketing across the U.S., surpassing rent in most major metros. In cities like Denver and Seattle, families with two kids are paying over 160% … Read more
California home sales have dropped below Great Recession levels, while inventory has surged more than 50% in the past year. As buyers retreat due to affordability issu… Read more
Multifamily building permits have plunged over 27% from their pandemic peak, signaling a major slowdown in new apartment construction. Learn how interest rates, tariff… Read more
Despite a turbulent start to the spring buying season, market experts see reasons for optimism—especially in the new-home sector. With mortgage rates fluctuating, tari… Read more
The 2025 spring housing market is seeing stalled momentum, with homebuyers backing off amid economic uncertainty and soaring mortgage payments. With home prices and in… Read more
In today's shifting housing market, sellers are asking nearly $39,000 more than buyers are willing to pay—the widest gap since 2020. Learn what’s driving the divide be… Read more
Home prices in the U.S. continue to climb, but the pace is slowing. February’s 3.9% annual increase signals a shift toward more sustainable growth, according to the FH… Read more
Divorce listings come with unique emotional and logistical challenges. Discover how the right real estate professional can help divorcing couples transition smoothly, … Read more
Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most