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Week of May 1st-New Study Examines Impact of Parental Money on Millennial Homebuying

May 1, 2016

How much does parental support help aspiring young homeowners?  According to a new working paper, "The Role of Parental Financial Assistance in the Transition to Homeownership by Young Adults," the probability of becoming a homeowner jumps 23 percent among adult children who receive a money transfer from their parent, based on data from the Health and Retirement Survey (HRS).

Not surprisingly, receiving money from one's parents—defined by a gift on $5,000 or more over the last two years, assistance received by 1 in 17 young adults between ages 20 and 49—help many get over the hurdle of making a down payment, the biggest obstacle to homeownership, according to half of young renters. But what the report commentary calls the "Bank of Mom and Dad" has its limitations. Other sets of data examined in the study suggested no correlation between parental wealth transfer and home buying, a discrepancy that may explain why this is the first in a series of reports that researchers plan to release on the topic.

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