The Rise of Nepo-Homebuyers: How Family Assistance is Shaping the Housing Market

The Rise of Nepo-Homebuyers: How Parents are Helping Millennials and Gen Zers Enter the Housing Market

In a housing market plagued by soaring prices and dwindling affordability, a new subset of homebuyers has emerged. Redfin’s chief economist, Daryl Fairweather, has coined them “nepo-homebuyers” – millennials and Gen Zers who are desperate to buy a home but are turning to their families for financial assistance rather than traditional mortgage lenders.

A recent survey conducted by Redfin found that 38% of buyers under the age of 30 used cash gifts from family members or inheritances for their down payments. This trend highlights the growing reliance on family money to navigate the challenging housing market.

The staggering cost of homeownership in states like California, where the average home value is close to $750,000, has made it nearly impossible for young buyers to save up for a down payment on their own. As a result, parents and family members are stepping in to provide financial support.

From gifting a down payment to cosigning a mortgage, there are various ways parents can help their children enter the housing market. However, financial experts caution that parents should carefully consider the implications of their support, ensuring that they are financially capable and protected in case of unforeseen circumstances.

While helping a child buy a home can be a generous and rewarding gesture, it is essential for parents to plan for potential challenges and setbacks. Whether it’s cosigning a mortgage or providing a down payment, parents must be prepared for the unexpected and ensure that their financial assistance is structured in a way that protects both parties.

As the housing market continues to present challenges for young buyers, the role of family support in facilitating homeownership for millennials and Gen Zers is becoming increasingly prevalent. The rise of nepo-homebuyers underscores the importance of intergenerational financial assistance in navigating the complexities of today’s real estate market.