Since the COVID-19 pandemic, new home prices have increased by 45%. (stock)
Gen Z and Millennial homebuyers are struggling to buy a home on their own. About 36% of young buyers plan to receive cash gifts from family members to help with a down payment on a home. Established red fin research.
The share of help millennials receive from their parents has increased over the past few years. In 2019, 18% of Millennials used a cash gift to finance a down payment, and by 2023, this proportion will rise to 23%.
Gen Z and Millennials are using more than just cash gifts. Some plan to use their inheritance for a down payment and live with parents or other family members to save for a 13% down payment.
“Nebo homebuyers have a growing advantage over first-generation homebuyers, with many young people with family finances losing money to their parents even though they work and earn very respectable incomes,” said Daryl Fairweather. , chief economist at Redfin.
For other younger buyers who don’t have families that can afford the down payment, working and saving are the most common ways they pay for it. About 60% of respondents to the Redfin survey said they save money directly from their paychecks, and 39% may take a second job to buy a home in the future.
“The big problem is that young Americans without family money are often excluded from homeownership,” Fairweather said. “Many of them also have good incomes, but they cannot afford to buy a house because they are at a generational disadvantage; ”
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Home buyers gain thousands of dollars as mortgage rates fall: REDFIN
New home prices are up 45% from pre-pandemic
Buying a home is difficult for the younger generation as purchase prices have risen sharply in the past few years, especially for new homes.
Last June, the typical new home sold for $243,000, up 2.1% from the same period last year and 45% higher than before the pandemic. Established red fin analysis.
To truly afford a starter home, a first-time home buyer must earn about $64,500 per year. That’s a $7,200 increase over last year. Rising home prices and rising mortgage rates have led to the need for higher incomes.
“Buyers looking for a new home in today’s market are wasting their efforts because there is no such thing as a new home in many parts of the country,” said Shahriar Bokhari, senior economist at Redfin.
“Due to rising prices and interest rates, the most affordable homes for sale are no longer affordable for those on a tight budget. This leaves many Americans completely out of the housing market, preventing them from building equity and ultimately permanent wealth.”
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Homebuyers consider downsizing and renovating to cope with higher housing prices
Home sales eased after a surge in February
Homes remain unaffordable as evidenced by the decline in existing home sales in March. Sales fell 4.3% to 4.9 million vehicles, Fannie Mae reported.
The decline reversed February’s upward trend in sales. Rising mortgage rates and high home prices are forcing buyers out of the market
Although sales are down, listings are up as the spring buying season gets underway. The ratio of available housing units increased by 4.7% to 1.11 million units.
Sales of existing homes fell, but new construction remained strong. The National Association of Home Builders/Wells Fargo Housing Market Index rose 3 percentage points to 51 in March, indicating that buyers are still interested in buying new homes.
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