Where would we be without family and friends? More of us would be apartment dwellers, according to a new report from the National Association of REALTORS®. Thirty-two percent of first-time homebuyers received a gift or loan from a relative or friend last year, according to the report, and 8% of repeat buyers received down payment gifts, according to “2020 Downpayment Expectations & Hurdles to Homeownership.” The report, released today, is based on surveys of REALTORS®, recent home buyers, and consumers.
Members of the silent generation and older baby boomers tended to be the most generous in helping an adult child or family member with money for a down payment (at 34% and 31%, respectively), Millennial buyers were the most likely age group to receive a down payment gift, at 24%.
Financial assistance may come with strings: Family and friends who contribute are more likely to provide input on what and where the buyers purchase. Half of REALTORS® surveyed said contributors had influence over what the buyers purchased, and 35% said contributors had influence over where the buyers purchased.
Regardless, it’s not unusual for buyers to turn to family and friends for input throughout the process. A quarter of REALTORS® said buyers brought family members on house tours, and 40% said buyers consulted with family members during the process. Twenty-eight percent of REALTORS® said parents and family members had become more involved in the process over the past five years, compared with 21% who said they’d become less involved and 32% who reported no change.
Down Payment Hurdles Persist
Saving for a down payment remains a chief struggle on the path to homeownership. More than a quarter of first-time homebuyers cited saving for a down payment as their biggest challenge.
Non-homeowners responding to the consumer survey said limited income, rising rents, and health and medical costs were all impediments to savings. Millennial non-homeowners were the most likely to say that student loan debt was a major factor delaying their home purchase. Since 2015, student loans have been the most cited expense that has delayed down payment savings, the NAR survey shows.
The study, which was completed prior to the COVID-19 pandemic, showed the median down payment was 12% for all buyers last year. Broken out, the down payment averaged 6% for first-time buyers and 16% for repeat buyers. Both figures are lower than 30 years ago, when the median down payment for all buyers averaged 20%.
Source: magazine.realtor
