Young Arizonans rely on the bank of Mom and Dad for homebuying Article originally posted on HERE on November 27, 2024 Younger Arizonans are increasingly relying on the bank of Mom and Dad to make their homeownership dreams a reality. Why it matters: Interest rates have stayed stubbornly high, and Valley home prices continue to tick up, leaving first-time homebuyers with a difficult choice: Keep waiting and likely pay a higher purchase price down the road or act now and stomach hefty monthly payments. With family help, buyers can make a larger down payment now, decreasing their monthly payments and allowing them to start building equity sooner, Phoenix Realtors president Sheryl Bowden told Axios. The big picture: More than a quarter of people between the ages of 18 and 43 who recently bought homes say they used family cash for down payments, up from 23% last year, according to Redfin research. Over 35% of millennials and Gen Zers who plan to buy a home soon expect to receive a cash gift from family to help fund their down payment, the real estate company found. By the numbers: Just about 11% of Phoenix homebuyers last year were under the age of 35. U.S. homebuyers are now the oldest on record, with the median age of first-timers reaching 38. How it works: Bowden said parents are increasingly looking at down payment assistance as an early inheritance. “Why [not] pass the money along now and let them start building their wealth while you are alive?” Bowden said. Threat level: Buyers should work with their real estate agent and a mortgage professional to ensure a parental gift doesn’t have negative tax implications. Zoom in: Axios Phoenix reader Cliff Connors told us he and his wife went beyond giving a 20% down payment to their son and decided to become co-owners and invest 30% of the purchase price so he could afford the monthly payment on a nicer Phoenix home in 2019. “The houses for which he could afford the mortgage payment weren’t very nice,” Connors said. Reality check: Phoenix home prices have climbed 67% since 2019. Flashback: Parental help in homebuying isn’t new — many of you shared stories of your parents helping out with a down payment in the 1990s. Yes, but: Down payments here and nationwide were often less than $20,000 in that decade, and many children saw their parents’ gifts as a loan they repaid in short order. Compare that to today, where a 20% down payment on the average Phoenix home is about $90,000. Bowden said she’s working with a client whose parent gifted her $100,000 — a far cry from the $15,000 loans many of you reported receiving in the ’90s. What we’re watching: Those “who don’t have family money are often shut out of homeownership,” Redfin chief economist Daryl Fairweather said in a research report. In time, this could widen the homeownership gap between Black and white families, an Urban Institute analysis suggests.