The rise of the ‘NEPO’ homeowner! Four in ten under-30s rely on family money to cover their down payment on a property
The rise of the ‘NEPO’ homeowner! Four in ten young people under the age of thirty depend on family money to cover their down payment for a home
- Experts introduce term ‘fake homeowner’ as more and more young people rely on family money to cover their down payments
- Four in 10 buyers under 30 used an inheritance or a cash gift to help with the purchase
- Are you a fake homeowner or do you plan to help your child up the property ladder? Send an email to: money@dailymail.com
Four in 10 homebuyers under age 30 receive money from their families to cover their down payments, new research shows.
Experts are now coining the term “fake homebuyers” to refer to young people who rely on family money to get up the real estate ladder.
It’s because housing affordability is now worse than it was in 2006, when the real estate market was red hot leading up to the 2008 financial crash.
A survey of more than 500 buyers under the age of 30 Redfin found that 23 percent used a cash gift from relatives to cover their down payment, while another 21 percent used inheritance money.
Redfin chief economist Daryl Fairweather admitted she falls into the category of a “fake home buyer” after her mother helped her secure a property in 2015 when she was 27.
Four in 10 homebuyers under the age of 30 receive money from their families to help cover their down payment, a survey by Redfin shows
Redfin chief economist Daryl Fairweather admitted she falls into the category of a ‘fake homebuyer’ after her mother helped her buy a house at age 27
Her mother, who had health problems that prevented her from living alone, sold her apartment and gave Fairweather the proceeds.
She wrote for Forbes, βWithout my mother’s money, saving for a down payment would have taken me years. But instead I could buy a house and secure my position as a homeowner.’
She added, “If I had delayed buying my first home, I would have been facing an increasingly unaffordable housing market.”
Data from the Atlanta Federal Reserve shows that housing affordability is now the worst in decades, thanks to a perfect storm of high prices and skyrocketing mortgage rates.
The median cost of a US home β as tracked by the Fed β has reached $372,825.
Meanwhile, the average interest rate on a 30-year fixed-rate mortgage has climbed above 7 percent, according to government-backed lender Freddie Mac.
As a result, homebuyers have never been under more pressure to make a substantial down payment β ββto avoid excessive monthly payments.
Since 2006, homebuyers have faced the least affordable market, according to data from the Atlanta Federal Reserve
And the cost of a down payment can vary drastically by state. In California, a home costs an average of $741,789, meaning that a 20 percent down payment would net a buyer $148,358 β a figure unachievable for most under-30s.
On the other hand, the average cost of a Texas property is $301,763, which would require $60,353 for a 20 percent down payment.
Across the board, even ‘starter homes’ β which tend to be smaller, cheaper and aimed at first-time buyers β have risen in price by 13 percent, according to Redfin.
Fairweather told Fortune: ‘In the United States we want to see ourselves as a place where everyone can make it, as if where you were born or what family you were born into doesn’t matter.
“But that’s becoming less and less the case because of how expensive homeownership is and the role homeownership plays in terms of wealth accumulation.”