https://fortune.com/2023/08/28/housing-market-nepotism-homebuying-down-payment-help-from-parents/
Redfin chief economist Daryl Fairweather: "It seems like the only way to kind of get your foot in the door to the housing market is to have some help"
Ok but let’s stop blaming people for buying places to live and recognize that a larger problem is corporations buying properties by the dozens and using them as sky-high rentals or just a place to park money.
I'm okay with blaming nepotism. I also want to point out the other problem is the vast majority of new housing builds in cities is entirely luxury condos. You can't fix a supply and demand issue if you never address supply.
Calling that nepotism is a stretch imo. There is nothing wrong with borrowing money from your parents for a down payment just like there's nothing wrong with your parents paying your tuition.
The problem you highlighted - luxury development - is a significantly bigger issue. And that's less of an issue than corporate landlords.
Then there's private rentals which I'd say is the biggest factor involving individuals (not companies)
But a 28 year old borrowing money from dad is a drop in the bucket. It feels unfair to me to place any blame on them at all
Statistically speaking first time homebuyers are buying a single family home in the metro area of a smaller city. A large part of the reason they are making said purchase is to minimize cost.
I mean... If those are new you are addressing supply. Current luxury owners will move to the new, vacate theirs, medium up to those, etc.
We do have supply issues, but it really isn't "luxury" per se (ignoring that "luxury" is just a marketing term that means basically nothing).
However, there is a distinct lack of small-medium (800-1500 ft²) housing being built in most areas.
The two reasons housing is expensive:
The large portion of "increased costs" we see with housing over the last 50 years is basically just an increase in size (ignoring specific markets). Maybe 20 percent of the increase is for other reasons (one of which is the addition of 2+ car garages).
In cities, a lot of the new rental construction is "luxury" because it's both the most profitable multi-unit housing project, and because it recovers its investment outlay decades earlier than a rental complex that intends to charge near or moderately above the average rent prices. There's no market incentive for anyone to build affordable housing, unless the government subsidizes it, which is unsustainable and defeats the purpose of affordable housing in the first place.
They don't have to worry about occupancy as long as there's a housing shortage, so you're stuck between living in decades old apartments that have questionable utilities and maintenance, or paying 2-5 times as much to live in an equivalently sized new apartment. One of the cities I lived in was entirely split between old converted buildings (that kept raising their rent) and brand new luxury apartments that would bleed you dry.
Smaller houses would help, but even Tiny Homes are fucking expensive now, with them creeping up to a couple hundred thousand for less than 800 sq ft. Basically, builders wanna build expensive houses for a larger profit margin, corporate owners want prices to rise and strategically buy and sell, and private owners want it to be an investment. With the housing market cooling, and builders slowing new construction to wait it out until demand pushes prices back where they want, we're basically stuck in a self-regulating purgatory, where housing becoming affordable is something that all the market pressures are pushing against.
I think you mean the vast majority are single family homes. Lower density = fewer new houses = less tax revenue per unit area = US' crumbling infrastructure cities can't afford to fix becccause: low density
I don't get it.
I understand the current housing market is messed up, but parents helping their kids putting a down payment for their house is dystopic "nepotism" now? Wouldn't you help your loved ones if you have the means to do so even if you are not super rich?
Would it have been better if they told their kids to pick themselves up by their own bootstrap and get a 30 year loan from big banks instead?
You said that you don't get it. The point isn't that people are evil for helping their kids, the point is if the housing market is running on the assumption that houses are worth what a family plus their parents will pay for them, regular families won't be able to afford houses. If everyone agreed that regular young families should be able to afford a house and didn't rely on older mom and dad for money, houses would be more affordable for everyone.
I couldn't read the article because of the pay wall, but did they say what the 40% is an increase from? I know I got some help from my parents on a down payment in 1995, and it wasn't super unusual then.
Edit your comment to say, "in the limited circle of people I am exposed to" and your comment would include the context within which is often left our of these types of anecdotal statements.
For example, in the limited circle of people I am exposed to, the people I grew up with mostly ended up as burnouts, prisoners, or permanent renters.
We are limited by our reference frame, unless we are willing to step outside of our own anecdotes. And even then, it is not easy because humans don't think stochastically.
You seem to be making at least as many statements without data as I was, but at least I couched mine as personal experience, and the main point of my post was that if like to see the data. Do you actually know what percent of new home buyers got help from their family over the years, or are you taking shots at my comment without anything better to add?
Exactly, that was the point. If everyone shares data using only their personal perspectives then nothing advances. I did what you did, and illustrated the exact opposite point, showing the weakness of the original tactic. Neither of us said anything of value, but I suppose I wasn't as clear as I could have been. I'm not the best phone writer.
For example, in the limited circle of people I am exposed to, the people I grew up with mostly ended up as burnouts, prisoners, or permanent renters.
No offense, but maybe you need to hang out with a different crowd. Peers affect your development and success in life.
Starting out with no offense, then stating something that is transparently intended to cause offense, is such a thinly veiled tact that I feel bad that it is the best you could come up with. Just say what you want to say, no need to attempt to decorate it, especially so poorly.
Nonetheless, I'm doing quite fine in life, and even if I wasn't, it has no impact on the statement. That stated alone nullifies your comment. But I would like you to elaborate if you wish, I am unaware of anyone who controlled the circumstances of their birth, region of birth, or parents, but if you have guidance on how to do so, I welcome your advice.
A problem I've seen is that since the 90s there has been a progression from small, affordable ranch houses and such to minimansions. Homes have simply gotten bigger. One thing driving it has been the double income household, not only has this driven up prices since the homes simply cost more to make but with two people paying the mortgage you are now in a situation where if one person loses their income you can't cover for them. If it was a single income household and, say, you got disabled the other person could possibly cover for you.
Ok, if you are a middle class parent with a little bit of savings, and one of your child wants to buy a house, wouldn't you do everything you can with your money to help them too?
You don't have to be rich to want the best for your kids, and I really hate the selfish boomer mentalities of "oh I have it hard back in my day, so I'm not going to help my kids with anything to teach them a lesson about life." It's fucked up.
You're looking at it backwards. Nobody is saying that it's bad to help your family succeed. They're saying that it's fucked up that the only way gen-Z adults can afford homes is for their parents to pay their way.
I mean, this is the point I'm trying to make and I am agreeing with your statement here, and I honestly don't know what exactly we are disagreeing about.
The word "Nepotism" does have a negative connotation, so the article title is saying to me: "Helping your family succeed is nepotism and that's bad.". At least, that's the way I read it. Did I interpret it wrong?
The point is more "Success requires help from your family, and that's bad". There's nothing wrong with helping your kids succeed, but if economic conditions preclude most people without help from their parents from success, then success becomes intrinsically linked to the success of your parents. That sort of economic situation balloons into overt classism very quickly, which is the bad part.
The article just uses the prefix "nepo-", from the Latin for nephew/descendent, implying that the market is dominated by homebuyers that are distinguished by being someone's descendent.
Two sides to a coin, and also the difference between micro and macro. On an individual level, of course you're gonna help your kids, but on a large scale if help from family is required despite being otherwise doing everything you need to go (working, not squandering your money, etc), that's just bad news for the economy, and indeed promotes "nepotism", the bad kind.
Ok, if you are a middle class parent with a little bit of savings, and one of your child wants to buy a house, wouldn't you do everything you can with your money to help them too?
Some peoples don't have very nice parents, but that's besides the point. The point people are trying to get across is that you shouldn't have to depend on the generosity and fortune of your parents to ever dream of owning a home.
This isn't a criticism of parents wanting give their kids a headstart, it a criticism of dog eat dog capitalism.
I got curious about how the rate of home ownership compares now to in years prior. I found this chart on the Wikipedia article. That says that since the early 70s, the rate of home ownership has varied between just over 60% and just under 70%, and we're right about in the middle of the range now, coming off of a low about five years ago. I feel like people have this image that everyone has been able to afford a home until the last decade or so, but that doesn't seem to be the case.
On the other hand, wage stagnation is a very real problem, and my personal opinion is that it's a critical one for the country to address because a strong middle class has been key to our success for ages.
Then place the blame on capitalism instead of blaming what good parents are forced to do to help their kids under the current broken system, which was my point.
Ok, if you are a middle class parent with a little bit of savings, and one of your child wants to buy a house, wouldn’t you do everything you can with your money to help them too?
The point is that less and less people are in this position. Middle class parents with savings? What is this, 1985?
Many people saved up a decent amount money during COVID in the States, so I think that the cultural shift towards having a good amount of saving in bank accounts is starting for middle class Americans, especially given the economic uncertainties right now.
A few thousand saved up because of government programs and policies that have now largely expired isn't gonna net you a house anywhere in the US afaik.
They’re just about through those savings. Inflation + “catch up” vacations are the culprits. Look at credit card debt and that is before student loan payments restarted.
You seem to only be reaching for the "take this comment as a personal attack on my situation" part and missing the "this is a worrying trend if the requirement of home ownership is a stable family. Or stated more simply inference vs implication, pause being the "main character" of this comment section for a moment, because no one is discussing you. It would be helpful if you would stop inferring that we are. We have no control over your inferences.
To the topic, a stable family is something you are born into, an inheritance of its own. No one chooses their parents. The topic isn't "being a bad parent is badass!" but instead that "inheriting good parents" is now a requirement for home ownership. If you cannot see through this lens, I doubt further commentary would assist.
pause being the “main character” of this comment section for a moment
I love this and it's a reminder that nearly every comment section needs.
Do anything for your kids != do everything for your kids. I get where you are coming from but putting kids in a house they possibly can't afford can be a bigger issue later down the road.
But the housing market is so messed up right now that even "starter homes" are completely unaffordable to people that doesn't make ridiculous amounts of money, and that's a trend for everywhere in the States even in previously low cost of living areas.
In other words, the "house that normal people can afford" is going extinct, and that is actual messed up part, not parents helping their kids survive a messed up housing market.
Calling it "nepotism" is really weird. It's just family lending money to their kids.
Nepotism would be more like your parents owned a second home with renters living there, then you kicked the renters out because of your family connection just to live there rent free.
... Since the movie promotion campaign before the strike worked so well here, to test my theory, I'm trying to shitpost my way into an Oscar this year.
Let me get this straight. 4 generations living under the same roof is traditional, but helping your kids buy a house is dystopian?
Is this just coming from the “money is a crime” crowd?
helping your kids buy a house is dystopian?
It's dystopian when the only way to own a house is to be born into wealth. And we aren't there yet but that's where we are headed based on the stats.
Nepotism is a highly searched word at the moment for a number of reasons. They're hoping to game the SEO off the word and make their article more visible.
Wouldn't you help your loved ones if you have the means to do so even if you are not super rich?
Counter-point, I'm gay.
I hate this term ... giving your kids money to help them start out on their own isn't nepotism, it's parenting.
Nepotism is when you violate a responsibility you have to a third party (e.g., your employer) to act impartially in their interests, in order to benefit your family.
Is the idea that parents should donate their money equally to everyone's kids? This makes no sense.
I agree it isn't nepotism. But I think the societal expectation that parents have to help their children is a the same systemic oppression with a new face. This only applies to the well-to-do, who buy into capitalism. Give up their lives to the machine.
This power sincerely complicates coming out of the closet, dating and marrying for love, social expressions like tattoos, life choices like art instead of business. This gives us another reason to second guess whether we ought to live life for ourselves or to please our parents.
I mean, it's a bit tough for me to see it that way. Having wealthy parents who can use the leg up they intend to give you in life as a way of manipulating you into doing and being what they want, and that's gotta suck.
At the same time, you can cut ties with them and you end up in the same position a lot of us start in: having to do it on your own. You've got a choice that other people don't, it's difficult for me to see that as a disadvantage.
the same position a lot of us start in:
yea, the starting place sucks in this country and adding cognitive dissonance to whether or not to obey my shitty parents is not something I wanna have to worry about on top of the bog standard issues about healthcare and school loans.
Better to reign in hell than serve in heaven. The moment my parents played games with who I was going to be or they would cut me off I left them. I would pick homelessness again than give them an inch. They can go cry to their bff supply side jesus
Lmao. Thanks. I wish I had been so brave, and I aspire to be next time the opprtunity to stand up for myself shines.
It should definitely not be called nepotism at the individual level, but if you agree with the core premises that working should be able to grant you enough money to buy your own house, it could be argued that it is a societal kind of nepotism in that the family you have determines your most basic opportunities in life.
giving your kids money to help them start out on their own isn’t nepotism, it’s parenting.
You can just say your parents gave you an entire apartment building when you turned 18.
Is the idea that parents should donate their money equally to everyone’s kids? This makes no sense.
The idea is that Karen doesn't get veto power over construction and we have enough housing for all.
You can just say your parents gave you an entire apartment building when you turned 18.
I moved out and went no contact with my parents on my 17th birthday... but I would love to be able to give my kids the kind of help my parents didn't give me.
The idea is that Karen doesn't get veto power over construction and we have enough housing for all.
That's a very good idea, it's what I've been harping about in my other comments. You don't fix this issue by demonizing people for buying houses, you identify the reason there aren't enough houses in the first place and go after that.
San Francisco allowing property owners (whose houses have skyrocketed in value) to block any kind of dense housing being built is the reason SF is so utterly fucked.
You don't even need to have super rich parents. My mother helped me get my first home with 15K that she saved throughout the years. (I paid her back).
That was just enough for my down payment. Without that I couldn't have gotten the house.
I think the issue is what if you have no parents or parents with no money (or negative moneys). You could do everything right, go to school, get a professional job, and still not be able to buy a place.
The housing market is definitely fucked worldwide. Many don't have parents with money and can only rent or not even move out of their parents house.
Some of us got lucky with minimal down payment from their parents 5-10 years ago. Its just ridiculous how the market changed in such a small time. Like the houses are still the same, the population did not grow exponentially. Wtf is going on?
I thought I got hosed 10 years ago but when I look at prices now it is night and day. The demand has pushed people into smaller towns and into the rural areas so now I get to see a modular home that sold for $75,000 10 years ago be listed for $300,000 and sell.
The cost of new houses is not helping and talking with some small scale builders (they can only build 1 or 2 at a time) the cost to build is high enough to give many pause.
This is what happens when real estate becomes your nations biggest industry.
I have seen houses prices in some places in USA and property taxes. I hope you have very high salaries ( like more than 3-4 k / month ) . the property taxes sometimes are highter than a rent here ( italy ) in a medium size city. I mean with 6k / year you can rent a 2 room apartment not so far from the city center ( like 15 minutes by car )
My buddy is a small scale builder and he's on the sidelines currently. They have a few lots to build on in a subdivision. He's decided not to start for fear that his margin is going to evaporate or worse he's going to have to carry them. Carrying inventory will kill your business as a builder. He's even contemplating selling the lots since there is some cost in taxes and maintenance, though nowhere near the costs of an improved property.
What happened is that after 2008, builders became afraid to build (for good reason), and since then housing construction still hasn't rebounded to what it needs to be to meet demand. The houses they are building are bigger (5bd compared to 2-3bd), so new homes are also more expensive to begin with. Both first-time buyers and downsizing boomers are competing for the tiny supply of 2-3bds.
There’s an element of “be fiscally responsible and you too can save up” but more often than not, the answer is “make more money”.
Yes, that is the status quo now in Canada, you need to make $150,000 a year, minimum, to afford a mortgage to buy a low-quality apartment or home.
That's right. You can do everything right and still live and die poor. End the myth of meritocracy, it's all classism.
So your house was somewhere in the 75k to 150k range? Average home prices where I live and work are 800k. That would mean a down-payment of 80k to 160k. You would absolutely "need to have super rich parents" to get that kind of help. I'm happy for you that you were able to secure a home of your own with the help of family. That just isn't a simple reality for most most people who don't have super wealthy parents where I am from.
You only need 3% of the loan for a down-payment. That would be $500k assuming OP did not add anything in.
My parents helped my wife and I a bit. I grew up in a 1000 sqft house with 2-3 other siblings. I do, however recognize that not everyone's parents were lucky enough to have that much stashed away but should still have the opportunity to purchase a home.
That's true in the US, but depends heavily on the country: if you're buying in London, you only need 5% as a general rule, but other regulations push the average down payment to about 14% before purchasing is on the table. In the Netherlands, from my understanding, you wouldn't need a down payment at all.
I'm italian and here in 800k dollars is a very big house in a very good place. Or a good apartment in a big city. Your salaries are so good? I mean here median salary is like 1.9k dollars/ month ( after taxes and health insurance ). Your salary after taxes and insurance should be 6-8k dollars/month for a normal job. You have such high salaries?
No, we probably have a bigger gap between housing cost and worker pay. In my area:
Median household income $61k/year last year (per household not person)
Median price of a house that same year was apparently $400k. Including those way far away from the city. In my average but in the city neighborhood new builds are going for close to a million and older houses about 400k.
Median rent monthly here is an eye watering $2,350.
In italy is 30k, median price of one house is , i think between 100k and 200k ( apartment ). One million here you buy a 4000 sq.ft. indipendent house with garden in one of the best city places near downtown. ( btw we have a greater people density, so land here costs much more than in usa ).
2350 month... You rent a mansion. Btw we have no so much new houses. The cities are way older. The maximum price is for ancient reinessance palace with ancient frescoes or roman ruins included. They are selling a palace ( 10000 sq.ft. ) with reinessance frescoes that need a lot of work ( so i think 1 million more to renewate it ) for 2 millions.
Yes, the pay is an half. But the house prices are quite cheaper ( but the houses are smaller , 1800 sq.ft. apartment, 270k $. But if you need less space you can find for less than 100k.
Yes I think the big problem here (right here, maybe not USA as a whole) is there is no more little cheap places to buy, and the apartments for rent, they do not care if vacant - if they have 100 units and could rent them all out for $1k/month or rent half for $3k, they raise rent to $3k and leave half of them empty.
I think median pay for one worker is around $40k but many households have more than one worker.
You have really high property taxes, they cost as much as a rent in my country ( we have property taxes here, too, but not so high ) , it is impossible to rent something 1k/ month if fixed taxes are 400 or 800 / month. Your corporation have too much money to settle ( cause over evaluation of stocks ) and you goverment taxes too much houses ( cause corporations pay too low taxes ).
I'm in Florida and sales tax is high (not as high as most European VAT but high) and property tax high because they like to say "no state income tax" . Though if the house is your home, not an investment, it's lower and the yearly increase capped at 3% no matter the value assessment . And yes we bought a house and about 1/3 of the monthly cost is taxes and property insurance. And yes - corporations here and the richest families pay not enough. But with property taxes at least corporations & landlords do pay higher rate than homeowners (that is a part of why rents have increased, the skyrocketing property values. But most of that increase is greed, profit). So if one actually can buy the apartment the property taxes will not be so bad over time, even if the value shoots up, and will come down if value drops.
It's complicated but I think the main issues are greed and to some extent zoning & land use patterns - not so much inside the city - we have a good mix of houses, apartments, businesses, but so much land used for sprawling suburbs not more compact development, and that's expensive in a lot of ways.
800k is a pretty damn nice place unless you live in a super high cost of living place where it may only get you a decent place.
Borrowed 3k from my bad didn't have to pay back. There is nothing wrong with getting help from family to buy a home. Fuck this article. The housing issue is caused by large corporations who are buying up all the houses along with interest rates keeping average person from buying a home.
There is nothing wrong with getting help from family to buy a home.
It is indicative of a problem that nearly half of home buyers have to. And indicative that we are possibly heading in a direction where only those with familial wealth will own housing. This is objectively a problematic direction.
Also, yes, if it's some absurd amount like $200k borrowed, nepotism is the right word. A couple grand may not be a lot to you, but there are places where it is as well. I know for a fact plenty of people from my hometown would struggle to loan their child even a couple thousand to buy a home. But the child is stuck paying rent that's more than a mortgage, keeping them from savings up for said down payment. The fact we can't save money is a problem, and parents giving their children money to buy a house just masks the issue except for those without that money.
You're not wrong but again it because of greedy corruption and corporations buying our politicians.
Until we rise up and demand better it going get worse. Unfortunately we can't band together when 40 to 50% of Americans like the boot on their necks. Long as it hurts others too.
3k doesn't make you rich. I get 3k every tax return just on the kids or I did now one is over 18.
Now if it was 10k or more than maybe but even that is middle class not rich people money. Believe it or not having a million dollars will not make you rich. Oh it helps but it easy to lose and go poor again.
People don't understand what rich really is. 10 million our more now your a rich fuck because you now have generational wealth.
It was a joke on "bad" not "dad". Not saying there is anything wrong with parents helping family to buy a home. Its not the parents or childrens fault that the market requires this now.
Edit: I will make a comment on your statement about rates however. Rates are and have been historically low but prices high and going ever higher. It does not matter if the rate is 0.5% but the price is so high you can't even save the down payment.
That is not true, there are programs and different types of loans where you can buy a house with as little as 3% down payment.
3% is super low, not sure what country this is in but even if you can put up 3% can you afford the monthly payments?
For example for lets say a 1 million $ home (normal for a HCOL city) you have a $30,000 down payment and a monthly $5500 (based on about a 4.7% rate). This still seems hard. The down payment is not the only limit to home ownership.
The US allows only a 3% down-payment.
You are right about being able to afford it monthly. Your numbers seem like they may be closer to what they are in Canada. The median price here in Seattle is $800k which would be a $24k down-payment and a $6000 monthly payment with the average 7.1% interest rate, insurance, and taxes. Don't know what the mortgage insurance would likely be for that but that is likely another couple hundred. That is over $72,000 per year just in housing costs.
Forgot to add the extra 300 a month in shitty HOA fees that all places seem to have in HCOL areas.
There are not many here in Seattle aside from condo or townhouse HOAs. The condo dues are generally around that but they cover the maintenance of the whole building. In the suburbs the HOA dues are generally $50-100. That gets you a sign and maybe a small park. I don't need a sign and I already pay money for parks in the form of taxes. Although those developments probably do not have homeless campers down the street. The ones down the street from me are fairly clean and don't cause issues.
Urgh, HOAs are the devil. Condo fees are also bad, some people pay about the same in fees as on their mortgage.
Yes but if you don't qualify for a special program you are only seeing a 3% down payment with an exceptionally high interest rate and significant PMI. Which makes it even more unaffordable. That might help recent high income earners with little savings but again makes it difficult for average people with average savings.
God, if only people could just like pool their resources together to build homes or something...
We could even call it something like "social housing," and have it be a publically regulated service instead of treating housing as some sort of game of investment for the wealthy? No no, totally impossible...
Even going back to the way things were in the 70's where workers got a fairer share of the products of their labour that wasn't leeched away by non-productive shareholders would make a huge difference. There's a reason you could buy a house on a single income when you had 5 kids back then.
Hell we had deals where if you build the house yourself, they will give you the plot of land absolutely for free. But that was 30 years ago. I am absolutely sure people these days couldn't do it - either not manually skilled enough, but have the money, or manually skilled, but their job doesn't pay well enough to afford spending time building a house.
Well, the 70s was before the time of Reagan and Thatcher coming in and wrecking unions and deregulating commerce and industry.
Back before conservatives stripped the economy for parts, and left us with nothing? Yep.
You also pretty much described what S&Ls were.
Honestly wish they could make a comeback, but we'd need to ban them from becoming national organizations. Their biggest benefits were that they helped people get houses, provided proper financial advice, and kept money local.
They live in rundown shitholes mostly.
I tried to add a photo to this post but images seem to be banned atm due to the attacks on Lemmy. Just Google it and see the beauty of the land of krokodil.
I've heard that in the Soviet countries, they have very tall apartment buildings, many don't even have elevators. Some have elevators, but you have to pay to ride them.
Not really. There are "commie block" apartments across not just Russia but lots of Eastern and Central Europe that are more desirable, pleasant, and cheaper than many new developments in the US and UK.
You can also look at Red Vienna housing, another socialist urban design.
State-owned apartments are working out well in pretty much every other country on earth. And certainly in everyone region exceot perhaps North and South America.
And again, the corporate media is blaming anyone but real estate companies and market speculators.
Market speculators are a symptom of the problem, not the root cause. God knows "people giving their kids money for a downpayment" certainly isn't the root cause.
The foundational issue is that many high demand markets have artificial limitations on the amount of housing, and it's easier and more profitable for real estate developers to shit out mcmansions in the suburbs than denser housing where it's needed.
Demand keeps going up because the population keeps going up, while supply is focusing on fulfilling only the luxury end of the market.
That's not nepotism. Nepotism would be some land baron giving land to his kids, or a city official changing zoning to allow their family member to build something otherwise restricted.
As a programmer, making $70k a year (in Czechia), I couldn't afford (according to the banks) more than $100k mortgage, so I got $100k from my parents (the house is $200k). And it's in a small village of 2k residents. You get 4 times less space (and it's a flat) for the same price in the capital. And it's on the cheaper side, too.
Or I could've gotten a small flat in a shithole that probably has black mold and will crumble to dust in 20 years. It's bad everywhere.
Similar situation here, except my wife's grandpa passed away and left her some inheritance. We used most of it for the down payment.
Technically any advantage gained from family/friends is Nepotism. It's not purely bad ethically until you're talking about leadership and/or critical positions (like safety supervisor at a factory).
The fact that Nepotism is required to enter the middle class is not a healthy indicator for our society though.
That's really not technically true. The term "nepotism" originated from Catholic bishops and popes granting their unqualified nephews lucrative positions in the church ... it's always been seen as unethical, and has only been used to describe behavior perceived as unethical.
The dictionary definition of nepotism is "favoritism (as in appointment to a job) based on kinship."
This is a troubling signal of income inequality and social immobility, sure -- but it isn't nepotism.
They did more than give them positions. But I think we agree on the broad stuff. If you need family to get past income inequality then there's a big problem.
Don't worry, I was trying to buy a house with my parents this past year. Even if they sold their current house to help, we couldn't afford what we'd need (3 bed 2 bath) since they don't have a ton of savings and only one of them is working still.
So even with help, some of us are still too poor.
I got 20K from my parents for my down payment when I was 45 and they still had to co-sign for me to get approved. No way in hell I could have gotten the house without them.
My parents are shit. They can die in their plastic house I will be renting to death but I don't want to take a single penny from them
I'll definitely be buying my children houses, with all that tons of spare money I have around. Piles of it. Yep. Sooooo much money
Seriously, who are these people that can fork out $100k to each child? I don't even have retirement savings, and I'll die on the job, with any luck! #genx
Shit. I was in my 40s and it took a generous gift from my parents to buy my first house
My father did the same. He said "This is your inheritance. I'd rather see you enjoy it while I'm alive."
Around me and I assume elsewhere, mortgage payments are less than rent. All fucking expensive, but sometimes homeownership makes sense in the long term.
The country is ran by geriatric nepo babies... If you are not one of their crotch fruit, good luck, peasant! You are going to be experiencing a lot of that "free market" in your ass.
I see this a lot on the Internet. Someone will choose an intentionally ridiculous (but technically accurate) phrase to describe a relatively normal thing. They'll do so in an attempt to make said normal thing seem absolutely ridiculous.
However, in reality it just comes off as incredibly immature and makes it harder to take their entire point seriously.
But yeah very clever OP. 15 year old me would have thought you were a genius for saying "crotch fruit"
Almost reads like the author is fucking mad other people have rich parents who have the brains to help the very humans they created and brought into this life.
I for one support the revival of neo-feudalism and the divine right of kings, seeing as that is how the housing market is trending towards.
No thanks, we need to get rid of the (Royal Families) we have on this planet dirt, not add to it. Having said that, if you create a human being that goes on to live to 70-90 years, you are solely responsible for them until your death.
So the kids aren't responsible for themselves?
But honestly, this is all besides the point. The issue is that people need that assistance to even have a chance at buying a home. Not that there's parents with the means and empathy to help provide for their children. Trying to imply the blame is on the parents instead of the system thats been created is misinformation at its finest.
In a world where everything runs pn money, if parents didn't teach their kids how to make money before they are abandoned financially at 18, then those parents didn't do a good job and in fact failed them. They brought them into this world, so they should have helped them learn how to make and handle money in this world that's all about money. They wouldn't have had to struggle with the "system" they knew about before having them.
Yeah the market sucks, but being salty about parents financially supporting their kids ain't it
I'm not upset at parents helping their kids, I'm upset that we have a system that relies on you being born in fortunate circumstances to have a decent life.
I can see, however, that people buying homes with the financial help of their parents could make it almost impossible for people without that help to purchase. It's one of the reasons why I bought my first place in my 30s - I was competing with people who had huge down-payments courtesy of their wealthy parents.
It's the same reason why people resent homebuyers moving from a VHCOL location to a lower cost of living place, bringing with them the relatively large amounts of money they made from the sale of their old home or larger WFH salaries, driving up the housing costs and pricing out the locals. Also the same reason people dislike expats purchasing homes in relatively LCOL countries.
Problem is that this is antithetical to much of the grandstanding that we do about the beauty and efficiency and yadda yadda of free markets. The narrative is, of course, that anyone can succeed wholly on their own merit in a free market economy if they just try hard enough, and if you're not succeeding, then you're obviously just not trying. Yet, here we've got data that throws an asterisk into the mix and says that if you want to buy a house, you're probably going to need to have all three of:
parents
who have money
and are willing to share it with you.
None of which any individual is in any kind of control of. You can't tryhard your way into having wealthy parents that are happy to buy things for you, so now we're forced to re-examine the system and whether you really can succeed just by trying hard. The answer is more nuanced, but it boils down to luck. Yes, it is possible, given the right circumstances, that hard work can lead to success. In the overwhelming majority of cases, however, hard work means squat compared to luck. Other things are much more critical to success in our economic system, including owning assets, having powerful connections, and having the right skillset combined with the right opportunities, and most of those things boil down to luck.
I'm mortgaging a house, but I'm not delusional enough to believe that luck didn't play a role. We got very, very lucky to have the right opportunities at the right time, as well as to have one parent with the money and willingness to share it to help us get into our starter home. Failing one of those, which would have been simple enough to have failed, we'd still be renting and living in a much worse financial situation, both in terms of monthly bills and net worth. We worked for it, yes, but pulling on your bootstraps isn't enough, and it's time to stop pretending that it is. It hasn't been enough for a long time, and I can't fathom that it ever was the case.
hard work means squat compared to luck
More often than not the only rewards for hard work is more work and ruined health.
other people have rich parents who have the brains
*bank accounts
I dont know why you're conflating throwing money at your children with intelligence. If anything, it'd be empathy over brainpower.
Actually it's brain power, to not allow the humans they created, to be subjected, to insane rent costs for the rest of their lives.
There are a lot of fucking idiots who can not make money let alone manage money creating human beings and than claim GOD created them, they are idiots.
More like the problem is only people with rich parents can now afford owning a house. It's disgusting.
Well I’m pretty mad that I’ll never be able to afford a house, despite having a good solid job. My parents aren’t rich, so they can’t help me. And while I’m not mad at them for not being able to help, I am mad that all other things being equal that puts me at a disadvantage.
Here’s a hypothetical scenario: Let’s say I make $60K a year, am single, with significant student debt. Let’s also say because of the pandemic payment pause, maybe I was able to save, like $5K, and I want to buy a house. Not gonna happen. Now take all the same things but add in well-off parents who could help with a down payment. That hypothetical person gets a house. They have a definite advantage. To me, that’s not just unfair, it perpetuates a system of wealth transfer that only helps part of the population. Everyone should have the same opportunity to own a home, if they want to.
Don't forget the tightening of lending rules going on. Even if you have the down payment, most will not qualify for the mortgage unless they have some one co-sign (bank thinks you can't pay $1000 mortgage, so you have to pay $2000 rent).
Co-signing on mortgages us not a standard practice tho
If you got down payment % and income ratio, you get a mortgage. It ain't that hard, bigger issue is finding a house to match you income.
It is where I am, and the issue is indeed finding a house to match your income since the prices are going up everywhere. I think it is insane when families buy a 1 million $ home with a $200,000 income. But that is still cheaper then them renting and if the bank uses say a 30% of income rule then very few qualify.
What % of renter income is rent? Does anyone care?
When I was young people could not rent places unless they could make 30% of gross...
I think that stopped around 2015 or at least I don't hear any such ratios stopping people front renting.
Many people paying half of their incomes lol
I'm house hunting. I bought a foreclosure in 2008 and fixed it up and will have 160k for a down payment when it sells.
Despite this, my mortgage (plus taxes) will be AT MINIMUM 55% of my income. I have a very wide area I'm looking in and my requirements are small - 2+ bedrooms and a garage. The only homes in my budget need more work than I can afford.
I got pre-approved for a mortgage up to 75% of my income. Pair that with the layoffs happening around the country and we're poised for another crash which is exactly what corporate buyers want.
Sounds like the crazy lending during the sub prime boom. Not saying you are a bad bet but that seems like a crazy risk.
That's what I'm saying!! When my broker told me that I couldn't believe it. They know my income and banking balance, why on earth would they offer that loan?
But banks aren't stupid. Foreclosures are good for them in the long run and they know it.
When I was younger I worked at a bank (regional office doing loan verification of all things) 2009 ish and I can tell you banks can be and are often stupid, foreclosures are not good or wanted, but most of all the incentives for individuals don't line up with the banks overall best interest.
Good point. I’d never get approved for a mortgage on my own, so I’ll be stuck paying rent that’s more than any normal mortgage payment. It’s so clearly rigged against me and people like me.
The funny thing is if you incorporate your company can get a mortgage as long as you can show income though rent (you can list yourself as one of the renters for some reason). The rates are crap, but you can get one.
This seems to encourage more landlords over general ownership.
The fact that it's such a large percentage of new home owners is a new thing
It's the only way to afford a home anymore
My wife and I had enough for a down-payment but my parents leaning me $10k at a lower rate was helpful, vitally getting rid of the PMI quicker.
I bought my first home at 19, in the middle of the 2008/9 housing market crash. I made an exceptional amount for my age, and put a good deal less than 20% down.
I'd guess a lot of that 60% are in the same boat ... doing well for their age, and taking out an FHA loan.
