BAM Key Details:

  • A new Redfin report shows 36% of Millennial and Gen Z homebuyers plan to use money from family members for their down payment. 
  • Survey results show a lack of housing affordability is the number one barrier to homeownership for young American homebuyers. 

More than one third of young homebuyers—Millennials and Gen Z combined—plan to use money from family to fund their down payment. 

That’s according to a new Redfin report, based on a February survey conducted by Qualtrics and fielded nationwide to 3,000 U.S. homeowners and renters. 

Gen Z and millennial homebuyers are also getting help from family in other ways:

  • 16% say they’ll use an inheritance to help cover their down payment
  • 13% say they plan to live with their parents or other family members 

Working to earn more money is still the most common way for young homebuyers to fund down payments:

  • 60% say they’ll save money directly from paychecks
  • 39% say they’ll work a second job

The point is pretty much all young American homebuyers need additional funds to put down money on a home. And those who don’t have family members both willing and able to provide financial assistance are at a significant disadvantage. 

Redfin-chart-Family-cash-for-down-payment

Source: Redfin

Compared to 5 years ago, young buyers are twice as likely to fund down payments with family money

Redfin commissioned this survey in 2019 and 2023 as well, but results for those years are for millennials only. The 2024 results used in this report are for millennials and Gen Z combined. 

In 2019, only 18% of millennials used money from family to help cover their down payment, and that share had only increased to 23% in 2023. 

So, from 2019 to 2024, the share of respondents saying they used cash from family to fund a down payment doubled from 18% to 36%, which is not surprising since that figure now includes Gen Z—the youngest generation of homebuyers, many of whom are just getting started in their careers. 

In the U.S., home prices have gone up 40% from before the pandemic. They rose 7% just in the last year as low inventory kept prices elevated, despite cooling demand. 

Gen Z and millennials both, in many ways, face a tougher financial landscape than their Gen X and Boomer parents did at the same age. Their incomes are lower, they have more debt from student loans, and inflation has driven up the cost of almost everything—including housing. 

Forty-seven percent of parents with adult children (over 18) still support them financially. And the fact that so many young adults still rely on financial help from family to afford a down payment is further evidence of the fact that housing affordability remains a major challenge. 

In a recent analysis, Redfin economists revealed many Americans have been priced out of the starter home market due to rising home prices and high demand for affordable housing. 

Overall, the gap between what younger homebuyers are earning and what they need to afford a home has gotten wider since before the pandemic (though more recently that gap has narrowed a bit compared to October 2023). 

And homebuyers who can’t count on cash from family are feeling that gap more than most. 

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. 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.

Daryl Fairweather

Redfin Chief Economist

Survey shows lack of affordability is the #1 barrier to homeownership for young buyers

The results of Redfin’s survey show the number one barrier to homeownership for millennial and Gen Z buyers is the lack of housing affordability. Among those who say they’re not likely to buy a home in the near future, affordability is their biggest obstacle. 

Forty-three percent of Gen Z and millennial respondents say they’re not likely to buy a home soon because the homes available in their market are too expensive. 

That’s the most common response given by younger Americans when asked why they’re not planning to buy a home this year. The next three are closely-related: 

  • 34% are unable to save for a down payment
  • 29% are unable to afford the mortgage payments for available homes
  • 29% say high mortgage rates are their biggest barrier to homeownership
Redfin-chart-Lack-of-affordability

Source: Redfin

Among the Gen Z and millennial respondents not planning to buy a home in the near future, 16% say the lack of financial assistance from family or friends is a factor. And 12% say they need to pay off student loans before they can afford to buy a home. 

Read the full report for more information, including methodology.