Helping Kids Buy Their First Home: How One Family Used Smart Savings and Cash Offers to Achieve the American Dream. For years, Jean and her husband saved diligently to help their three children achieve homeownership. Their hard work enabled them to gift substantial down payments to their first two children, and ultimately purchase their youngest daughter's home outright for $186,000. Learn how this family leveraged cash offers and strategic financial planning to navigate the competitive housing market and secure their children's futures
Helping Children Buy Their First Home: How One Family Paid $186,000 Cash for a Peoria, Illinois Home. When their youngest daughter found her dream home near Peoria, Illinois, this family took action. To secure the purchase and avoid mortgage complications, they made a cash offer, gifting their daughter $186,000 to buy the house outright. This strategic move ensured a smooth transition and highlights the increasing role of family financial support in today's competitive housing market
To secure their daughter's dream home, the Frohlings leveraged the negotiation power of a cash offer, ensuring a smooth and stress-free transition. This strategic move highlights the increasing role of family financial assistance in today's competitive real estate market
Family financial help in home buying: While "nepo babies" dominate headlines, parental assistance in real estate remains common. Data from the National Association of Realtors reveals that over the past three decades, roughly 30% of first-time homebuyers annually received financial help from family or friends, with family assistance impacting 16% of all home purchases. High housing costs and interest rates suggest this trend may continue to rise
Despite high home prices and interest rates, family financial assistance for homebuyers is surprisingly down. While many expect a surge in "nepo-buyers" – millennials and Gen Z receiving help from Baby Boomer parents – National Association of Realtors (NAR) data reveals a decline. In 2024, only 25% of first-time homebuyers received family help, a significant drop from the historical average of 30%. This trend extends to all homebuyers, with only 10% receiving family financial assistance
Defying market trends, young adults are cracking the housing code without parental assistance. Contrary to the narrative of struggling millennials relying on the "Bank of Mom and Dad," new data reveals a surprising number of first-time homebuyers are securing properties independently. Is the age of the nepo-buyer over? Explore the unexpected factors fueling this shift in the housing market
Today's first-time homebuyers are unlike any we've seen before, says NAR Deputy Chief Economist Jessica Lautz. Increased parental financial assistance, including outright cash purchases, is significantly impacting homeownership for younger generations, reflecting a shift in the market dynamics
Fewer family financial boosts may signal a cooling housing market, offering a glimmer of hope for first-time homebuyers relying solely on their savings. While this trend might seem positive for those without familial support, it also highlights underlying market instability. The decline in "nepo-buyers" suggests deeper issues within the housing market's current structure
Bank of Mom and Dad: Fueling the American Dream of Homeownership. Family financial assistance plays a crucial role in home buying. In 2019, a staggering 32% of first-time homebuyers and 16% of all buyers received help from family and friends, according to the National Association of Realtors (NAR). This trend peaked in 2010, with 36% of first-time buyers and 24% of all buyers utilizing family support. Learn how parental financial contributions—gifts, loans, or co-purchases—are impacting homeownership rates and navigating the challenges of today's market
Family support in homeownership remains crucial. Parents continue to provide financial assistance, such as down payment gifts and outright home purchases, to help their children enter the housing market. This generational wealth transfer significantly impacts first-time homebuyers and reflects a long-standing trend of family support in navigating the challenges of homeownership
Family financial help boosts homeownership, even for middle-class buyers. Mortgage loan officer Chase Rogers, based in Birmingham, Alabama, reports seeing middle-class families leverage financial assistance to afford larger homes. While these buyers could qualify for a mortgage independently, family contributions enable them to purchase homes in a higher price range, securing a property better suited to their needs. This trend highlights the ongoing importance of familial support in navigating today's challenging housing market
Sacramento mortgage loan officer Geoff Black witnessed the COVID-era housing frenzy firsthand, observing parents pouring money into the market to help their children buy homes. The competitive market fueled a "get in now" mentality, leaving many feeling they had to act quickly to avoid being priced out
Helping kids buy their first home? One parent gifted $350,000, simply stating, "Get me some grandbabies!" Learn how family financial support, including cash gifts and down payment assistance, significantly impacts homeownership, especially in today's competitive market. Discover the power of family financial aid and its growing role in real estate
Millennial & Gen Z Homebuyers: Facing a Housing Crisis? Soaring home prices and high mortgage rates have created a challenging market for first-time buyers. The median home price is up 37% since 2020, requiring a household income nearing $117,000 – a significant increase from $78,000 in early 2020. With mortgage rates hovering around 6.4%, many young adults are relying on family financial assistance to afford a home. A Redfin survey reveals over one-third of Gen Z and millennial homebuyers expect family cash gifts to fund their purchases, highlighting the growing impact of generational wealth on homeownership
Declining Homebuyer Gift Assistance: A Generational Shift? The rising cost of housing has dramatically impacted the role of family financial support in home purchases. Data reveals a significant drop in the percentage of first-time homebuyers receiving gifts from family or friends, falling from 27% in 2020-2021 to a record low of 22% in 2022, rising only slightly to 23% in 2023. This trend challenges the long-standing tradition of generational wealth transfer in the housing market, where family assistance previously accounted for roughly 30% of first-time homebuyers annually
The decline of nepo buyers also coincides with another big shift in the makeup of new homeowners: First-time buyers are older and winning out with less frequency than ever before. NAR data shows that between June 2021 and June 2022, the typical first-time buyer was 36, the highest median age since NAR started tracking the figure in 1981. New homeowners accounted for a bit more than a quarter of all home purchases, a record low. Things have only gotten worse. The typical age of a first-time homebuyer last year hit another all-time high of 38, NAR data shows. First-time buyers’ market share also shrank to a new low of just 24%, down from 32% the year prior. Perhaps unsurprisingly, buyers who made it through the door were better funded than in years past — the median household income of first-timers was $97,000, a jump of $26,000 in two years.
These shifts help explain the nepo-buyer pullback. Family help is less common because the market is dominated by older, more independent buyers who can push forward despite the affordability challenges. Each year that prospective homeowners kick the can down the road, they grow less likely to ask for a family handout. NAR found last year that younger millennials, which it defined as ages 26 to 34, got gifts from family at about twice the rate of the elder cohort, ages 35 to 44.
“It becomes more uncomfortable for someone who’s 38 years old, which is the median age of today’s first-time homebuyer, to ask for mom and dad’s help to purchase a home,” Lautz says, “as opposed to someone who is in their late 20s or younger 30s.”
This shift could have ripple effects throughout this cohort’s entire lives. Older first-time homebuyers miss out on years of home-equity building, contributing to what Lautz often refers to as a “housing economy of ‘haves’ and ‘have-nots.'” Instead of people embarking on their homeownership journey with a little help from their parents, they’re staying put entirely.
“To me, it’s a sign of buyer weakness when that gifting is pulling back,” Black tells me.
As I noted in a recent story about homebuyers’ cold feet, the fear of missing out that defined the early-COVID market has given way to a different flavor of FOMO. People are wary of taking the homebuying plunge given the state of the world: The job market is wobbling as executives pull back on hiring and warn of permanently smaller headcounts. Student-loan delinquencies are spiking. In light of the staggering costs of homeownership, an analysis by the housing research firm Zelman concluded that the rent-versus-buy math favors renting to a degree that hasn’t been seen since the early 1980s. Prospective buyers may also be counting on borrowing rates to drop or sellers to slash prices even further.
With those on shakier ground hanging back, the buyers forging ahead are older and wealthier than at any point in more than four decades. They’re relying more on their own investment accounts and less on the bank of mom and dad. The nepo buyer has taken a back seat.
Of course, parents can pass along privilege in all kinds of ways that aren’t clear at the closing table. Paying for college tuition, say, can ensure their child graduates debt-free and ready to stack savings. Children whose parents are homeowners are more likely to end up buying a home themselves. A growing number of first-time buyers are moving straight out of their parents’ places, saving on rent before heading out on their own. Even homebuyers who don’t get a financial handout may benefit from the advice and know-how of parents who have already weathered the process.
But cold, hard cash remains the simplest way to get a foothold in the market. That kind of help doesn’t always equate to a free ride, though. Roughly a year after Frohling and her husband purchased the Illinois home, their daughter refinanced to pull equity out of the house to pay her parents back. The maneuver leaves a new loan attached to the place, which their daughter will now begin the long process of paying off — and building a nest egg of her own.
While nepo buyers’ numbers are down, they’re far from extinct. Bill Mitchell, the loan officer who helped the Frohlings execute the refinance, says it’s hard to overstate the power of a cash offer in a competitive market like Illinois, where a relative lack of homebuilding means the number of homes available for sale is still tight. Mitchell estimates that about 20% of his clients use family money to beef up their offers.
“When I see that situation, and I see that I’ve got these clients that have made an offer on one, two, three homes and got beat out by cash offers, that’s typically when I’ll say, ‘Hey, let’s think of potential alternative strategies here,'” Mitchell tells me. “‘Do you have family that would be willing to help out in a situation like this?'”
Frohling says she initially worried she had robbed her daughter of the joy that comes with buying something all on your own after years of saving. But for Frohling’s daughter, homeownership didn’t come without sacrifice: She and her husband, for example, skipped throwing a big wedding and saved that money instead. And in the end, Frohling tells me, the ease and convenience were worth it.
“I know that we are blessed to be able to do that,” Frohling says.
James Rodriguez is a senior reporter on Business Insider’s Discourse team.
Business Insider’s Discourse stories provide perspectives on the day’s most pressing issues, informed by analysis, reporting, and expertise.
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