How your wealth can help younger generations buy a house

For many parents or grandparents, it is difficult to watch a family member struggling to buy their first home right now. That’s because you’ve seen firsthand how home ownership has added stability to your life and helped grow your wealth – and you want your loved ones to have the same opportunities.

But with all the affordability challenges in recent years, that can seem like an uphill battle – even if things are slowly improving lately. Here’s what you might not realize. You may be in a unique position to help (thanks to the equity in your current home).

The stock benefit you might not be thinking about

You have probably owned your home for years, perhaps even decades. And during that time two things happened:

• Home values ​​rose
• Your mortgage balance has shrunk (or you have paid it off in full)

That combination has created substance equity for many homeowners like you.

And while you might think of that equity as something you want to have in your pocket for retirement, it can also serve another purpose: helping the next generation overcome the biggest hurdle in their path.

The number 1 thing holding back young buyers

When John Burns Research and advice (JBREC) asked What kept renters from buying wasn’t mortgage rates or house prices. It was the initial cost, which mainly saved enough for their down payment (see graph below):

That’s where you may be able to make more of a difference than you realize. You have no control over rates or prices. But you may be able to use your home equity to help pay for these initial costs. And giving money to your loved one so they can buy a house doesn’t mean you’re jeopardizing your own future.

Even a small portion of your wealth can put them in a position to finally get the keys to their first place – and if you’re strategic about it, you’ll still have a lot left over for retirement.

With an estimated $68 and $84 trillion of the wealth expected to pass from older generations to younger generations over the next twenty years, many families are already thinking differently about when and how that wealth will be passed on. Maybe it makes sense for your family to think about it too.

Help from loved ones makes a move possible for many first-time buyers

A growing share of young buyers are using gifts and loans from their loved ones to purchase their own home. According to to the National Association of Real Estate Agents (NAR), almost 1 in 5 first-time buyers use a cash gift from family or loved ones for their down payment.

And other young buyers are using their inheritance or a loan from someone they know to finally enter the market (see graphs below):

This is about opportunities, not obligations

Every family’s situation is different and your decision should be made carefully. It’s just that if you’ve built up a lot of equity, you may have more room to help than you think.

It is not just a financial gift. It provides stability, security, and a foundation that could change their lives for the better – especially at a time when they may not be able to do it on their own.

In short

If you’re curious about what your home equity can make possible, for you or your loved ones, start with a simple conversation with a local real estate agent. Because sometimes the most meaningful investment you can make is for the next generation.

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