Who's funding new home purchases? Mom and Dad
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Lindsey Bailey/Axios
Parents tell Axios they're still helping their kids pay for new houses.
Why it matters: As housing costs soar, 26% of younger people who recently bought homes say they used family cash for down payments, up from 23% last year, according to Redfin research.
How it works: Parents have maxed out annual gift tax limits or lent their children money to win bidding wars.
- Deb Sen says she's giving her married son money each year to help him and his partner purchase a property in Chicago.
- Even so, she expects it will take the couple around three years to afford a down payment.
In Minneapolis, parents recently paid cash for their child's $1.2 million home, real estate agent Joey Oslund says.
Between the lines: More house hunters are asking loved ones for cash instead of traditional wedding or baby gifts.
- Others are boomeranging back to their family homes to save money.
- Near-record shares of men and women ages 25-34 lived with their parents last year, four decades of census data shows.
Reality check: Those "who don't have family money are often shut out of homeownership," Redfin chief economist Daryl Fairweather said in a research report.
- In time, this could widen the homeownership gap between Black and white families, an Urban Institute analysis suggests.
The intrigue: Some parents have struck deals they say are mutually beneficial.
- Colette Martin-Wilde's son purchased a three-bedroom house in New Orleans with her support.
- Martin-Wilde, who lives in Chicago, invested $15,000 in the home and co-signed the loan, with the condition that she'd get her money back plus a cut of the proceeds when he sold it.
- "While we don't want to be the 'Bank of Mom and Dad,' there are opportunities to help our kids learn and grow financially that are mutually beneficial," Martin-Wilde says.
What's next: President-elect Trump's proposals to blunt the high cost of housing include easing construction regulations and making more federal land available for development.
- But experts say there's no quick fix for the challenges plaguing the home market.
