First-Time Homebuyers Lean on Family Wealth to Buy Homes
(Bloomberg) — First-time homebuyers are not only historically old but also increasingly reliant on family wealth.
A record 10% of first-time homebuyers paid all cash in the year through June, with 28% of those transactions backed by inheritance, according to a report from the National Association of Realtors released Thursday.
“The housing market is beginning to see a generational transfer of wealth,” Jessica Lautz, deputy chief economist at NAR, said in a statement. “Because people are living longer, the generation receiving that wealth is no longer young adults.”
The median age of first-time homebuyers held at a record high of 40. But these buyers still make up just a fraction of the market. First-time homebuyers accounted for 22% of purchases — close to a record low.
One in 10 first-time homebuyers used inheritance for their down payment, also a record. A fourth used gifts or loans from family and friends.
The figures underscore how elevated home prices and mortgage rates have raised the financial hurdles to owning a home, particularly for younger Americans. Repeat buyers — who saw their home values surge during the pandemic — continue to make up the vast majority of those purchasing homes.
Frustration over the inability to buy a home was an issue that drove some voters, like Keith Bullard, to the polls this week.
“We can’t save enough money to buy a home because they’re so expensive out here,” said Bullard, a 52-year-old teacher living with his wife in Odessa, Texas.
Even when they did find a home within their price range, they were outbid by a repeat homeowner looking to buy and flip the house. Bullard said he voted down-ballot for Democrats this election cycle for the first time.
