### Inheritance Boosts First-Time Homebuyers as Market Challenges Persist

A historic number of Americans in 2024 have utilized inheritances to assist in financing down payments on their first homes, a new survey by the National Association of Realtors (NAR) reveals. The study found that individuals who bought homes for the first time between July 2023 and June 2024 were not only older but also wealthier compared to previous years, underscoring the intensifying challenges many face in the current real estate market. Home prices are approaching record highs, and mortgage rates remain prohibitively steep.

The NAR survey indicates a notable shift in the demographic profile of first-time buyers, who now have a median household income of $97,000, up from $95,900 the previous year. Additionally, the median age of these first-time buyers has risen to an unprecedented 38 years, compared to a generation ago when they were typically in their late 20s.

“We're observing a dichotomy in the real estate market where typical first-time buyers, such as schoolteachers or first responders, are struggling to enter,” stated Jessica Lautz, NAR deputy chief economist. “Those who can afford to buy are increasingly a select few.”

The sentiments are reflected in the declining percentage of first-time purchasers, now accounting for just 24% of all homebuyers - the lowest share since the NAR began tracking this data in 1981. The report also reveals that 25% of first-time buyers relied on gifts or loans from relatives or friends to fund their home purchases. This is slightly higher than in 2022 and 2023 but remains below the pre-pandemic average of 31% from 1997 to 2019. Notably, a record 7% of first-time buyers utilized their inheritance for down payments.

Lautz suggests the decreasing reliance on familial financial assistance might be correlated with the rising median age of first-time buyers, who may now have their own savings. "Everyone's situation is different, but that seems to be operating in conjunction as the median age increases," she noted.

The report also highlights the disparities between current homeowners benefiting from recent spikes in home values and prospective buyers facing a tougher market. Similar to first-time buyers, repeat buyers are older with a median age of 61, up from 58 last year, and their household income has climbed to $114,300 from $111,700.

Competing against repeat buyers poses significant challenges for first-time buyers. Many repeat buyers leverage the sale of their existing homes to offer larger down payments, with a median of 23% compared to just 9% for first-time buyers. Furthermore, 31% of repeat buyers were able to pay entirely in cash.

“The data illustrates both the struggle to secure homes and the significant housing wealth in the market,” Lautz said.

The competitive housing market has given sellers considerable control over pricing. Homes on the market for four weeks or less typically sold at 100% of their asking price, with 23% of buyers paying above the asking price, according to the report.

In light of affordability issues, some Americans are exploring alternative living arrangements. Multi-generational living has surged to a record high of 17% in the past year. Among these homebuyers, 36% cited cost savings, while 21% accommodated adult children moving back home.