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

by Real estate financingMission+
5 minutes read

Young Americans who have the means are turning to family for help with down payments as housing costs soar. Working a second job is also a popular way to save for a down payment, with 2 in 5 millennials and Gen Zers doing so. 

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. 

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

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.

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. 

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 2024 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 so 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. Nearly half of parents with children over 18 report providing their adult children with financial help. 

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. 

“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,” said Redfin Chief Economist Daryl Fairweather. “The bigger problem is that 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. This contributes to wealth inequality and often prevents young people from gaining economic ground on their peers who come from more privileged backgrounds. The American Dream is just as much about class mobility as it is the home with a white-picket fence, and the housing affordability crisis has made both elements of the dream harder to attain. ”

Survey results show that lack of affordability is biggest barrier to homeownership for young Americans

Among the young Americans who aren’t likely to buy a home in the near future, lack of affordability is the biggest barrier. 

Nearly half (43%) of Gen Zers and millennials say they’re unlikely to purchase a home soon because the homes on the market are too expensive, the most common response. Roughly one-third (34%) say their ability to save for a down payment is a barrier to buying a home, the next most common response, followed by ability to afford mortgage payments (29%) and high mortgage rates (29%). 

Of the Gen Zers and millennials who aren’t planning to buy a home in the near future, 16% cited lack of financial support from family or friends as a reason. 

More than one in 10 (12%) young Americans said they need to pay off student loans before they would be able to purchase a home. 

Methodology

This report focuses on the 208 responses from adult Gen Zers (aged 18 to 27) and millennials (aged 28 to 43) to this question: “Which of the following actions are you likely to take to help fund your down payment on your next home?” The report also includes the roughly 200 responses from Gen Zers and millennials to this question: Which of the following do you agree are reasons you are not likely to purchase a home in the near future? Select all that apply.”

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