The tradition of parents and grandparents offering down payment funds for their offspring to help them buy their first home is nothing new. But what is relatively unknown is the widespread financial assistance given by parents to millennials for rent money, everyday expenses and one-time expenses such as moving costs.
Before you start the “millennials are lazy” soundtrack, though, it’s important to recognize the impact of economic issues on this generation, particularly in the housing market.
A recent analysis by Apartment List found that since 2000, home prices have risen by 73 percent and rents have increased by 61 percent. At the same time, incomes for younger households have only increased 31 percent.
One in four renters spend more than half their income on rent, and 15 percent of 25- to 35-year-olds live with their parents to save money on rent.
Apartment List’s survey found that 7.9 percent of non-student millennials receive help from their parents for their monthly rent. That number rises to 10.8 percent when students are included.
Among those receiving rent assistance, 1 in 3 have their rent paid in full by their parents. About 60 percent of millennials getting help pay less than half of their rent because of parental support.
Among millennials who anticipate buying a house in the future, 17.1 percent expect help from their parents for a down payment. One in three anticipate family members will cover 30 percent or more of their down payment.
Of course, millennials who come from lower-income families or whose parents don’t have the means or will to provide financial support to their adult children lack the safety net of help with rent or a home purchase.
Numerous studies show that this pattern of parents helping their kids reinforces existing income inequality, because even a small amount of support can stop an eviction, prevent debt problems or provide a needed boost for earlier homeownership.
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