What the Rise of ‘Nepo-Homebuyers’ Means for the Housing Market

A recent Redfin survey revealed that ​​38% of more than 500 buyers under the age of 30 either used cash provided by family members or an inheritance to afford their down payment, making them what Redfin’s chief economist, Daryl Fairweather, calls, “nepo-homebuyers.” Many young buyers relying on financial support from their families would otherwise be unable to afford home purchases in today’s high-cost housing market.

With home prices increasing by more than 40% and mortgage rates more than doubling since the onset of the COVID-19 pandemic, homeownership is out of reach for a growing number of Americans, and first-time buyers are at a significant disadvantage, Fortune reports. 

“If you’re trying to get into the housing market, and because of how high interest rates are, because of how high home prices are, you have to be like the exception to the rule in terms of your earnings to get into the housing market if you don’t come with cash,” Fairweather said, and that cash typically comes from parents or other family members.  

At the same time, the income needed to buy a starter home as a first-time homebuyer is higher than it used to be, given that it jumped 13% in the last year alone, Fairweather explained, citing a recent Redfin analysis. So it’s clear, family money can make the difference. And, the earlier you can buy a home, the more equity you can build—which let’s say in the case of a starter home, can help you buy your next, maybe forever home.

“It really kind of turns into a snowball effect, where the people who are getting help, the earliest, end up accumulating even more wealth, and it further solidifies that divide between the haves and the have-nots and perpetuates intergenerational wealth inequality,” Fairweather said. 

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