Oct 20, 2023 - News

Florida's "nepo homebuyers" need family help for down payments

Illustration: Sarah Grillo/Axios

Many young Floridians can only afford to buy a home if they have help.

What's happening: Homebuyers in Miami need to earn $143,000 annually to afford the area's typical monthly mortgage payment of $3,580, according to a report released this week by Redfin.

  • That's 33% more than they would have needed a year ago, as home prices and mortgage rates have risen.
  • The median household income in Miami-Dade County is $61,252, per the Health Council of South Florida.

Why it matters: A separate Redfin report on "nepo homebuyers" found 38% of recent buyers under 30 years old received family money in order to afford their down payments, Axios' Brianna Crane reports.

Share of mortgage purchase requests from millennials
Note: Millennials are adults ages 27 to 42 in 2023. Data: LendingTree; Map: Alice Feng/Axios

Zoom in: Azlyn Canchola and her husband bought a three-bedroom bungalow in Tampa Heights in April 2022. They saved for a few months, then family gave them cash for the rest of the down payment.

What they're saying: "We wouldn't have been able to buy at the time we did it without help," Canchola tells Axios.

  • Mortgage rates were still relatively low and rent kept climbing, Canchola says. They decided to buy to lock in their monthly payment and build wealth.
  • "We specifically picked our neighborhood for its future value," she says. They bought their house for $326,000 while some homes nearby are currently on the market for $450,000.

By the numbers: While many millennials want to buy a home, nearly three-quarters of them say affordability is a major obstacle, according to a Bankrate study.

  • Among U.S. millennials who don't already own a home, 49% say income is the No. 1 barrier to buying, per the study. That's closely followed by down payment and closing costs (42%) and high home prices (47%).
  • Mortgage rates and poor credit were among other top responses.

The intrigue: Roughly 20% of millennials say they want to buy but are just not ready yet. And 8% of millennials say they never want to own a home, per the study.

Yes, but: Waiting to buy isn't a bad thing.

Be smart: "You can build wealth just fine by renting," says Bankrate chief financial analyst Greg McBride.

  • Taking time to save, invest, build credit and advance in your career can meaningfully improve your financial picture, he says.
  • At least at first, homeownership "sucks the cash right out of you," McBride says. You need to save beyond the initial down payment to weather unexpected additional expenses — the No. 1 reason millennial homeowners have buyer's remorse.

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