Dear Liz: In all the back and forth over the best way to help adult children buy a home, you neglected the obvious answer, which is not to do it at all. Adults shouldn’t expect handouts from their parents.
Answer: That’s certainly one perspective, but one that ignores the soaring cost of buying a first home and the benefits of transferring wealth between generations.
Many younger people could afford a mortgage payment but struggle to save a down payment while juggling high rents, rising living costs and student loan debt. As home prices climb, homeownership moves further and further out of reach. Help from parents can allow adult children to buy sooner, start building equity and potentially accumulate more wealth over time. A “handout,” as you call it, early in adulthood can make a much bigger difference than an inheritance received decades later.
Of course, many parents aren’t in a fortunate financial position to help their adult children. Others help at the expense of their own finances, or in ways that keep their kids financially dependent.
If the parents are willing and financially able, though, assistance with a down payment can give their children a huge head start toward building wealth in an increasingly tough housing market.