United States first time home buyers turning to parents: loanDepot

More first time buyers in the United States are turning to parents for financial assistance when buying a home, and the ways parents contribute are likely to shift to some degree, according to a survey commissioned by nonbank lender loanDepot LLC.

17% of parents with adult children between the ages of 18 and 35 expect to help their children buy a home in the next five years, compared to 13% in the past five years — an increase of 31%.

First time home buyer activity is already close to an all-time low, but the share of home sales attributable to that group would be even smaller if not for the financial assistance parents have provided to many young adults, said Dave Norris, president and chief operations officer at loanDepot LLC.

75% of millennial-age respondents who said they have received financial support from their parents when buying a home said that assistance made it possible for them to buy a home, he said.

But the ways that parents provide this assistance may be shifting, the results suggested.

Source: loanDepot

65% of parents who helped their kids buy a home in the last five years chipped in by putting money toward a down payment, with almost two in 10 of that group covering nearly 90% of a down payment, according to the survey.

But only half of parents who expect to help their children buy homes in the future anticipate subsidizing a down payment, with less than one in 10 indicating that they expect to contribute 90% or more of a down payment.

The survey suggests that parents who lend a helping hand to their children who buy homes in the years ahead will be more likely to provide assistance by paying off student loan debt or letting their kids live at home so they can save money than they were in the past, according to the survey.

Source: loanDepot