Real Estate

published : 2023-10-19

First-Time Homebuyers Relying on 'the Bank of Mom and Dad' Face Warning from Housing Market Expert

Nearly 40% of Home Buyers Under 30 Use Family Money to Help Purchase Property

A young couple happily inspecting a house for sale, with their parents standing beside them. Taken with a Canon EOS 80D.

In today's volatile housing market, first-time homebuyers are going to extremes to secure deals, raising concerns from housing experts.

National Association of Home Builders (NAHB) CEO, Jim Tobin, shared his thoughts on the matter during an interview on 'Varney & Co.'

Tobin highlighted the high demand for homes among first-time buyers, emphasizing that the only way many of them can afford a home is with financial assistance from their families.

According to a recent survey by Redfin, around 38% of homebuyers under the age of 30 reported using cash gifts or inheritance from family to make down payments.

Tobin expressed his opinion that 'anything goes' in the current housing market, where lenders prioritize the borrower's ability to repay rather than the source of the down payment.

National Association of Home Builders CEO, Jim Tobin, speaking at a housing market conference, sharing insights on the challenges faced by first-time homebuyers. Taken with a Nikon D850.

The latest data from the National Association of Home Builders/Wells Fargo Housing Market Index shows a worrying decline in builder confidence for the third consecutive month.

Surveying the pulse of the single-family housing market, the index fell five points to 40, marking the lowest reading since January 2023.

This decline follows a previous five-point drop in September.

Additionally, mortgage rates have spiked, with the popular 30-year fixed mortgage currently sitting around 7.57%, significantly higher than the 6.92% rate recorded a year ago.

There has been growing concern about the impact of the housing crisis on young people, prompting discussions among experts and policymakers.

A construction site with workers busy building new homes, symbolizing the need for increased housing supply. Taken with a Sony Alpha a7 III.

Jim Tobin argued that homeownership is a gateway to the middle class and acknowledged that parents and family members play a crucial role in helping their children achieve this.

Highlighting the lack of housing supply and rising interest rates as contributing factors to declining builder sentiment and high home prices, Tobin stressed the need for more supply to stabilize prices.

He called on the Federal Reserve to halt rate hikes to temper demand and urged for increased collaboration between industry associations and the Fed on this matter.

As the housing market continues to face challenges, experts and investors are closely monitoring the situation, hoping for positive actions to support first-time homebuyers and ensure a more sustainable market.

This report was compiled with information from various sources and contributors.