Oct 16, 2023 - Economy

"Nepo-homebuyers": 38% of young buyers use family money for down payments

Illustration of a welcome mat that reads "help"

Illustration: Sarah Grillo/Axios

Young people across the U.S. can't afford to buy homes without major budget changes or help from family.

Why it matters: A Redfin report on "nepo-homebuyers" found 38% of recent buyers under age 30 received family money in order to afford their down payment.

The big picture: Nearly three-quarters of aspiring homebuyers say affordability is the No. 1 obstacle to owning a house, per a Bankrate study.

  • In the first half of 2022, nearly 52% of LendingTree's mortgage requests across the U.S. came from millennials. In the first half of 2023, it dropped to roughly 50%.

What they're saying: Denver resident Cheryl Lyons and her husband moved in with family to save for a down payment. Now they have the cash, but mortgage rates have priced them out of buying yet again.

  • "We just keep hoping the rates lower soon so we can get out of his parents' basement," Lyons tells Axios.

Lauren Jessick is in her early 30s and renting in Denver. She and her partner, who are getting married next year, are cutting back on groceries when they can and plan to use cash gifts from the wedding for a down payment.

  • In Tampa, Azlyn Canchola and her husband bought a three-bed bungalow in April 2022. They saved for a few months, and family gave them cash for the rest of the down payment.
  • "We wouldn't have been able to buy at the time we did it without help," Canchola tells Axios.
  • Engineer and artist David Greaves was able to buy a Nashville home with his partner three years ago — after giving up his car and living in a rental with five roommates prior to buying.

Zoom out: Among U.S. millennials who don't already own a home, 44% say income is the No. 1 barrier to buying, per the study, closely followed by down payment and closing costs (43%) and high home prices (42%).

  • Mortgage rates and poor credit were among other top responses.

Yes, but: Millennials still make up a large share of first-time buyers.

The latest: Housing industry groups are urging the Fed to stop raising interest rates.

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