Nepo-Homebuyers

More Than One-Third of Gen Z and Millennial Homebuyers Plan to Use Family Money For Down Payment

(NASDAQ: RDFN)—More than one-third (36%) of Gen Zers and millennials who plan to buy a home soon expect to receive a cash gift from family to help fund their down payment, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Young homebuyers are also receiving help from family members in other ways. Roughly one in six (16%) Gen Zers and millennials say they’ll use an inheritance to help fund their down payment, and 13% plan to live with their parents or other family members to save money for down payments.

Working to earn money is the most common way for young buyers to fund down payments: 60% report they’ll save directly from paychecks, and 39% are likely to work a second job, the most common responses to this question.

That’s based on a Redfin-commissioned survey conducted by Qualtrics in February 2024. The nationally representative survey was fielded to roughly 3,000 U.S. homeowners and renters.

Young homebuyers are twice as likely to use family money for down payment than they were 5 years ago

Just 18% of millennials used a cash gift from family to help fund their down payment in 2019, according to a Redfin survey from that time, and the share had only increased to 23% by 2023. Note that the 2019 and 2023 survey results noted here are for millennials only, while the results in this report are for millennials combined with Gen Zers.

Young Americans are increasingly turning to family to help fund down payments largely because it’s increasingly expensive to purchase a home. U.S. home prices are up nearly 40% from before the pandemic, and they rose 7% in the last year alone, with low inventory propping up prices despite dwindling demand.

In many ways, Gen Zers and millennials face a more difficult financial landscape than their parents did at the same age: Their wages are lower than their parents’ wages were, they have more student loan debt, and inflation has pushed up the cost of nearly everything, including housing.

The fact that so many young Americans rely on help from family to afford a down payment is emblematic of the fact that housing is simply too expensive. A recent Redfin analysis found that starter homes are getting much more difficult to afford, pricing many Americans out of the starter-home market altogether. People without financial help from family are at a major disadvantage when it comes to purchasing a home.