The emergence of “NEPO” homeowners! For their down payment on a home, four out of five people under 30 rely on family support. As more young people use family funds for their down payments, experts have coined the phrase “nepo homeowner.” Inheritance or a monetary gift were utilized to finance the purchase by four out of five buyers under 30. Without her mother’s money, according to economist Daryl Fairweather, she would have needed years to purchase a home. For Dailymail.Com, consumer reporter Helena Kelly Revised: 16:30, August 29, 2023 EDT
According to recent study, 4 in 10 homeowners under 30 receive funding from their families to help with the down payment. Young individuals who rely on family funds to climb on the housing ladder are now referred to as “nepo homebuyers” by experts. It occurs at a time when house affordability is worse than it was in 2006, when the housing market was booming before the 2008 financial crisis. Redfin conducted a poll of more than 500 buyers under the age of 30 and discovered that 23% of them had received a cash gift from family members to finance their down payment and that another 21% had used inheritance funds.
After her mother assisted her in purchasing a home in 2015 when she was 27 years old, Redfin Chief Economist Daryl Fairweather acknowledged that she fits the description of a “nepo homebuyer.”
Her mother, who had health issues that prevented her from living alone, sold her condo and gave Fairweather the cash. Without my mother’s money, it would have taken me years to save enough for a down payment, the author of a Forbes article claimed. However, I was able to buy a house instead, securing my status as a homeowner.
.’If I had put off buying my first house, the property market would have been more and more out of my price range, she continued. According to data from the Atlanta Federal Reserve, a perfect storm of rising home prices and rapidly rising mortgage rates has made housing affordability the worst it has been in decades.
The Fed now tracks the median price of a US home at $372, 825.According to government-backed lender Freddie Mac, the average rate on a 30-year fixed-rate mortgage has topped 7%. As a result, there has never been more pressure on homebuyers to come up with a sizeable down payment in order to avoid making too many monthly payments. Additionally, the price of a down payment varies greatly between states.
A 20 percent down payment would cost a buyer in California $741,789 on average, which is out of reach for most millennials under 30.On the other side, the median price of a home in Texas is $301,763, meaning a 20% down payment would cost $60,353.
Even “starter homes,” which are often smaller and less expensive constructions targeted at first-time buyers, have seen an overall cost increase of 13%, according to Redfin.
‘In the United States, we’d like to think of ourselves as a nation where anybody can make it, that where you’re born or the family you’re into doesn’t matter,’ Fairweather said to Fortune.However, given the high cost of property and the importance of homeownership to the process of accumulating wealth, this is no longer the case as much.