The “nepo baby” discussion has made its way into the world of real estate.
Current Findings The study by brokerage firm Redfin found that a significant proportion of young homebuyers used family funds to make a down payment on a home.
“It seems like the only way to get a foothold in the housing market is to have some help,” said Daryl Fairweather, Redfin’s chief economist. said Fortune — refers to those who use their inheritance or other family-related money to buy real estate as “Nepo homebuyers.”
According to Redfin’s survey of more than 500 buyers under the age of 30, 38% received financial support from relatives for their down payment.
The situation is largely due to the current crisis of unaffordable housing prices, especially as inflation continues to grip the American economy.
Redfin also found that today’s first-time buyers need to earn 13% more than they did a year ago to afford a typical US entry-level home.
“If you’re trying to get into the real estate market, because of high interest rates and real estate prices, you have to be an exception to the rule in terms of your income to get into the real estate market when you don’t have cash,” Fairweather explained to Fortune adding that the problem is quickly becoming intergenerational as Nepo owners build better equity by buying younger companies.
“It’s really becoming a sort of snowball effect, where the people who get help first end up accumulating even more wealth, and it’s further widening the gap between the haves and have-nots and perpetuating wealth inequality between generations.” said Fairweather, who is a Nepo homebuyer herself. She bought her first house in 2015 at the age of 27 with the proceeds from the sale of her mother’s condo.
(Her mother had health problems and couldn’t live alone, so the two moved in together.)
That first home “allowed me to build equity, which I eventually used to buy a home for my mother when she was able to live independently again,” Fairweather adds in an article forbes.