Purchasing a house can be one of the most important and life-changing investments one can make in their lifetime.
However, in the present day, complications can arise when house-hunting because of the high costs and expenses, which has led to many needing help with housing affordability.
This is apparent for younger generations of home buyers in the United States, with a survey commissioned by real estate company Redfin revealing that just over 30 per cent of Gen Z and millennial residents believe they will need assistance. They anticipate that their families will need to contribute out of their pockets towards a down payment.
The survey, which was responded to by 3000 Americans, also found that around one-sixth of people below the age of 43 will transfer money from their family inheritance to secure an up-front cost for a home.
Regarding millennials, the number of home buyers from 2019 to 2023 who relied on family money increased from 18 to 23 per cent.
The rising costs in the housing sector have meant that nearly 50 per cent of Gen Z and millennial US residents believe it is not worth house-hunting in the near future. Thirty-four per cent admitted to being unable to afford a down payment, so they put off buying a house.
Other notable reasons why Gen Z and millennial respondents suggested that homebuying is unlikely for them due to high mortgage payments (29 per cent), it would be too costly to upkeep a home (20 per cent), there are not many homes on sale (18 per cent), and they do not have family or friends supporting them financially.
Thirteen per cent claimed they plan to continue living with their parents or another family member. To afford a home, it is estimated that homebuyers have to earn 80 per cent more than before the COVID-19 pandemic.
Chief Redfin economist Daryl Fairweather explained how those who can rely on family for costs are in a better position in the house-hunting landscape. He said: "Nepo-homebuyers have a growing advantage over first-generation homebuyers. Because housing costs have soared so much, many young adults with family money get help from Mom and Dad even when they have jobs and earn a perfectly respectable income."
House prices have surged by 40 per cent since COVID-19, which has even put off younger Americans with a solid income. Sixty per cent can save up for a home, and 39 per cent are seeking extra income from side hustles. Still, more is needed for some people, especially those not relying on financial support from family members.
Fairweather clarified: "Young Americans who don't have family money are often shut out of homeownership. Many of them earn a perfectly good income, too, but they aren't able to afford a home because they're at a generational disadvantage; they don't have a pot of family money to dip into."
Redfin revealed in another report recently that American-based homebuyers need to earn a yearly salary of $114,000 to afford the cost of a median-priced house. However, this is very tricky for many as the average income for households in the nation is 35 per cent lower at $84,072.
Ultimately, the struggle to afford housing from newer generations of Americans could lead to the wealth gap in the country widening at an alarming rate.
