Oct 14, 2023 - Real Estate

Denver millennials move in with parents, get down payment gifts

Illustration of a real estate for sale sign with the word NOPE on it.

Illustration: Brendan Lynch/Axios

Denver millennials can't catch a break in this wild housing market.

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

What they're saying: 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 don't want to go back renting because it will be a lot of work to move into a place and then break the lease," Lyons tells Axios. "We just keep hoping the rates lower soon so we can get out of his parents' basement!"

The other side: People from large West Coast cities are moving to Denver for its relative affordability.

  • Andrew Smith and his partner bought a house in Baker in 2021. Thanks to high returns on some stock investments, they were able to save about 20% of their home's value.
  • Prior to Denver, they were renting in Seattle where, even with some savings, homeownership felt impossible.
  • "The timeline for owning a house in Seattle was unclear — that's how far out it was," Smith says.

Lauren Jessick is in her early 30s and renting in Littleton. 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.

  • They're also considering pulling from their retirement accounts, even though there will be penalties for doing so, she says.

Some millennials who can afford a home have help. 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: Among millennials who don't already own a home, 44% say income is the top barrier to buying, per data Bankrate shared with Axios. And 43% say they can't afford the downpayment and closing costs.

Be smart: Waiting to buy isn't a bad thing. "You can build wealth just fine by renting," says Bankrate chief financial analyst Greg McBride.

  • Taking time to save, invest, build your credit and advance in your career can meaningfully improve your financial picture, he says.
  • Homeownership "sucks the cash right out of you," at least at first, McBride says. You need to save beyond the initial down payment to weather unexpected additional expenses — the primary reason millennial homeowners have buyers' remorse.

Go deeper: Extreme weather could raise insurance rates nationwide, hiking the cost of homeownership even higher.

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