The Blubber

40% of under 30s received family money for down payment, per Redfin.

A striking 38% of recent homebuyers under the age of 30 utilized either a cash gift from a family member or an inheritance to secure the funds for their down payment, as revealed by a Spring 2023 survey commissioned by Redfin. The escalating costs associated with first-time homeownership have created a financial barrier for young individuals without familial financial support. Consequently, a substantial portion of young homeowners can be characterized as "nepo-homebuyers," signifying their reliance on family funds to acquire a home. This trend not only contributes to intergenerational wealth disparity but also constrains economic opportunities for young individuals and their families.

Achieving homeownership for young people is increasingly challenging, with senior Americans (aged 65 and older) being approximately twice as likely to own homes compared to their younger counterparts (under 35). Moreover, many young homeowners have received financial assistance from their families. According to the Redfin survey, which investigated how recent homebuyers accumulated funds for their down payments, 509 respondents were under the age of 30. Among these young homebuyers, 23% utilized cash gifts from family members, while 21% relied on inheritance funds for their down payment.

For young homebuyers lacking family financial support, building intergenerational wealth poses a formidable challenge. Certain neighborhoods across the United States, identified as high-opportunity neighborhoods by Harvard economist Raj Chetty, offer children from low-income families a better chance of becoming high earners. However, an analysis by Redfin indicates that these high-opportunity neighborhoods have become financially inaccessible to the families that could benefit most from raising children in such environments. The share of affordable homes for sale in high-opportunity neighborhoods dwindled from 37% in 2013 to a mere 13% in 2022.

The reliance of young people on family assistance to afford homes is part of a broader issue related to wealth inequality. Research from economists at The University of Chicago underscores that children born to homeowner parents are significantly more likely to become homeowners in adulthood. Additionally, a 2021 Redfin survey of approximately 1,500 homeowners found that 79% had a parent who owned a home, and 67% had a grandparent who owned a home.