The reliance on family financial support for down payments among young homebuyers has surged in recent years, with 36% of Gen Z and millennials now utilizing this strategy. This represents a doubling of the rate observed five years ago, when only 18% of millennials reported using family cash gifts for down payments.
The shift towards family support is primarily driven by the escalating costs of purchasing a home in the United States. Since the pre-COVID-19 pandemic, housing prices have surged nearly 40%, with a further 7% increase in the past year alone. This inflation, coupled with a low inventory market, has placed additional pressure on young Americans, who also face challenges such as lower wages compared to previous generations, higher levels of student loan debt, and the overall impact of inflation on living costs.
Despite the reliance on family assistance, direct savings from paychecks remain the primary approach for accumulating down payment funds, with 60% of respondents adopting this method. Additionally, 39% of young buyers are considering taking on a second job to boost their savings, reflecting the determination among this demographic to achieve homeownership.
The survey also identified affordability as the primary obstacle for young individuals hesitant about entering the housing market. 43% of respondents cite the high cost of available homes as a deterrent, followed by difficulties in saving for a down payment (34%), affording mortgage payments (29%), and navigating high mortgage rates (29%).