Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Join our community, read the PF Wiki, and get on top of your finances!
Note: This community is not region centric, so if you are posting anything specific to a certain region, kindly specify that in the title (something like [USA], [EU], [AUS] etc.)
Definitely a trend I see around me (Europe, 30 years old).
All of my friends able to buy got at least 30k - 50k from their parents.
Is it the same around you? How do you deal with this?
Also, some data from a few days back:
https://discuss.tchncs.de/post/2426785?scrollToComments=true
I'm a nepo buyer ✋
My American Boomer parents view helping my sister and I out with things like this as a legal early inheritance transfer to make up for how long we expect their lives to go on. In that way, this isn't really different from being able to buy things because you received an actual inheritance after your parents died.
The problem isn't the people who are able to do this. The problem is that other people for generations have been systematically robbed from also being able to do this. We should have government programs to provide this service for those people to make up for that generational theft.
Also: Jesus, Canada, build some fucking housing what the fuck. I knew it was bad, but I assumed it was on par with the US.
This graph is cherry picked from the worst of Canadian sectors and the best of American. Still in general Canadian housing is bad. The problem isn't about building houses. Everyone wants to live within 30 miles of the border. All our farm land and natural green space is in the same location. So what would you do? Which would you have us do? Bulldoze farm land, or bulldoze protected green space that is already threatened? If it was as easy as "build houses" we could have done that. We have more than enough houses/accommodation for everyone. But much of the available supply is bought up by people that have more money than the people that need the housing. Add in foreign investment, corporations, speculation and pent up demand.... Well here we are.
I mean, the same could be said for the larger regional areas of the US surrounding the cities that are experiencing the fastest increase in housing prices. But the problem, like you said, is people want to live in a small area that is already occupied, and not always where the available houses are (when they're available and not being hoarded by "investors")
I know that here in the Boston area what we need is more housING but not more housES. Build up, not out. And make vertical housing actually appealing by building walkable neighborhoods with access to good public transit so cars aren't a necessity.
It's a big change but not an impossible one
Yeah that would be nice. No one wants to live in apartments here because they are usually in the city. If you we've to raise a family, it's not easy in a city.
The problem isn’t about building houses. Everyone wants to live within 30 miles of the border. All our farm land and natural green space is in the same location. So what would you do? Which would you have us do? Bulldoze farm land, or bulldoze protected green space that is already threatened? If it was as easy as “build houses” we could have done that.
Then build fucking apartments instead, damn it!
IDK, the student loans program in the US didn't work out very well, and a lot of people just ended up with a ton of debt they couldn't handle. I'm worried the same would happen with a federal housing loan.
What we need instead is better housing density. Right now, if you want to buy a property (at least in the US), you need to also buy a car and commute long distances because that's the only way you're going to be able to afford a place at all. If we instead built more mixed housing near transit lines (e.g. business at ground level and a purchasable apartment above it), you could own something and not need a car to get around. That would work for the first few years, and if you decide to grow your family, you could use your equity as a down payment on a larger place.
But we really don't have much in the way of a starter home. In my area, $300k is "cheap," and with loans now around 7%, you're going to need a larger down payment to keep mortgage payments reasonable. Most new construction around here is either luxury apartments or high end housing.
If we instead built more mixed housing near transit lines (e.g. business at ground level and a purchasable apartment above it), you could own something and not need a car to get around.
Unfortunately, zoning laws don't allow this in most US cities
Right, so the focus should be on fixing zoning laws, not on trying to get people into needlessly expensive homes.
Not a loan. A cash grant for a down payment. Government money if you don't have wealthy parents like mine.
But also mixed use housing.
The Downpayment Toward Equity Act (currently still in Congress, but already budgeted for) is meant to address the generational wealth gap you described, so there is hope. It would give a $25,000 grant to first-generation first-time home buyers.
I don't think anyone should be ashamed of getting help from parents for buying a home. As you said, it is essentially an advance on one's inheritance. Nepotism is favoritism for something intended to be merit-based.
This has been a thing for quite a while. Families also band together to loan someone cash so they could make an all cash offer, then refinance after the purchase to pay back the loaned cash.
It sucks for people who aren't able to get financial assistance from their family (I'm one of them) but this isn't nepotism. This is families doing what is necessary to get a first house in a lot of current housing markets. Nepotism would be if houses were only being sold to family members/acquaintances of the owners.
Have we just got to the point where anyone with a decent relationship with their parents that means that they help them out sometimes is now a "nepo baby".
My parents lent me money for my mortgage deposit but I paid it back to them in installments alongside the mortgage. They only did that as I'd shown over thirty years of life I can be trusted with money and wouldn't flake on the repayments to them, not because we're rich.
Yup, we were the same way. And I'll do the same for my kids.
My parents aren't rich and neither am I, but I do want to help my kids out. I'm going to help them with school to, but I suppose that's nepotism as well to OP.
I wonder what kind of world these people want, everyone thrown out to make their own way at 18?
Ikr? I left home at 18, but my parents helped pay for school (about half), though I still had to work my way through. When I got married, I paid for all of my expenses. When we started growing our family (one kid, second planned), my parents helped me buy a house because mortgage rates were so low and waiting to save would have meant we'd miss out on those rates. We paid them back quickly.
I totally could've done it all myself, but we would've pissed so much more money away on rent and higher interest rates.
I'm now self reliant and am totally willing to help out any siblings, nephews, etc if needed. I was always taught to pay it forward, and that's what I plan to do.
This has kinda been a thing since the invention of money and real estate
Hasn't it always been like that? Article doesn't really give any comparison figures against prior years, but I really don't think this is anything new.
Some data for US and Canada:
https://discuss.tchncs.de/post/2426785?scrollToComments=true
Canada is indeed crazy
Calling it nepotism for home buying is just sour. I dont know what kind of money bags is putting 20%+ on a first time buyers home but if they can do it then id rather that then sone fucking chinese pool landlord barrons that own 5000 houses accross the country to leave empty.
What's wrong with that? Parental responsibility doesn't just end the moment a child turns 18
I never asked my parents for money, they just ended up giving it to me for my future
What's wrong with that?
Doesn't it seem a little unfair if ones ability to own land is dictated by the lottery of what their parents have achieved?
This could be the beginning of a slow slide back towards feudalism and lords with no social mobility for the lower classes.
Is it unfair that having wealthy parents gives you an advantage in life?
Yeah, it is... buy that doesn't make it unethical for parents to help their kids, it means the society has to improve the safety net.
That's the wrong message that you are getting out of that article. The problem is that more and more people need their parents help to get in the market.
That trend means that at one point, help from parents will be obligatory to buy a first house, closing the market to anyone that doesn't have rich parents.
I got some bad news to you re: the market being closed to poor people.
Yes, it's bad news. That's the point of the article, to draw attention to a bad societal trend, it's social commentary. Identifying a problem is the first step to solving it.
Sure, it's not unethical for a kid to accept (necessary) help to survive, though it is to vote for or otherwise institute a society where that is necessary. The point the article is attempting to make is social commentary to draw attention to the fact that increasingly the lottery of inheritance is the only means of owning a home.
The first step to resolving the issue is identifying it. Nobody likes the implication that their success is not earned, by making that uncomfortable point the author is attempting to cause people to support change to correct this trend.
This isn't "nepotism" and trying to conflate everything with "nepotism" is really just providing cover for Capitalism. Having rich parents is a thing that will always occur. Parents that are able to provide you with more support is not the issue here. The issue is that Capitalism has made it where without more support, the average person cannot afford a home.
Well I mean yeah we bought our house off my father-in-law who sold it at extreme mates rates, and my parents paid my half of the deposit. And I don't think that's news, that's the way it's been for people I know for the last 10 years or so. We only relatively recently managed to get a mortgage because I was doing contract work for a long time which paid a lot better but isn't stable enough to get one.
I feel lucky because I know there's no way I'd be able to live in our own house without parental help - we're both public sector workers so we do alright but don't have any money to put aside for savings. Which also means we won't be able to return the favour for our son, or at least not to the same degree. I've just turned 40, I have friends a few years younger who are working but still live with family because they have no other realistic option.
My father-in-law worked in the property world as a surveyor since the 70s or so and when his father died young he bought some flats in London with the inheritance. His dad was a miner so the flats were dirt cheap but they were in King's Cross which back then was known for drugs and prostitution. He despised the 80s, because he knew it was short term gain for his generation at the expense at the next ones - instead of investing in the future, governments were just selling everything off to the private sector for short term gain, and so he had this masterplan of saving all this stuff up for his kids. He's an interesting person to talk to.
My parents had enough money to put aside in savings for the future for me and my sister every month, which went towards the house deposit and my university fees. They didn't own any flats in London but they had that extra to put aside. That's what our generation doesn't have, the ability to put anything significant aside for the future - it all goes on bills.
My parents couldn't help me when I was house shopping. I got a USDA mortgage so I had no down payment, just closing costs. I recommend it for anyone living in or wanting to move to a rural area. There's a minimum credit requirement and the house has to meet HUD specs and a couple other things which are annoying.
I'm fucked right now but should well off in retirement. Just need to convince my pregnant wife to move a few states away so I can buy a house.
I have received $0 from my parents. My grandma helped me buy some furniture when I moved out to my first apartment, and bless her for that. But I cannot comprehend asking for that much money from my parents, not that they would have it to give me anyway. I feel bad when they want to pay for my dinner, let alone $30k+.
Despite that, I have managed to save more than enough saved for a down payment. But with the market the way it is I have no interest in dropping that much money for a house, especially when our landlord hasn't raised the rent for years and we have a good deal. $30k from your parents is a drop in the bucket when you're looking at a huge ass mortgage payment every month. A house would have to be magical as fuck for the amount they are gonna charge per month with the current prices and rates.
Nothing to deal with. Everyone has different circumstances. You get a house when you’re ready.
Would absolutely have been impossible for us without money from my mother's trust (deceased) and my father. Even living cheaply, with a very good deal on an apartment that we luckily locked in as COVID started and rent increases were put on moratorium, the appreciation of properties was so aggressive that saving $1300 a month meant we were actually losing ground on hitting a 20% down-payment on half decent starter homes. We desperately need the housing bubble to burst, but it's not even """really""" a bubble.
== Edit: the below is untrue ==
In the UK you have to state where the money came from, so there's only a limited amount your family can help.
Can't threaten the landlords!
What? There is no limit on the size of funds that can be gifted to help buy a house in the UK. If your family wants to bung you £500k of their own money there's nothing stopping them.
The requirement to demonstrate proof of funds for that money is to prevent money laundering.
Someone lied to me.. thanks for the correction
No problem. There's a lot of confusing stuff surrounding homebuying.