The Great Wealth Transfer is starting to have an impact on the real estate market.
A record proportion of first-time home buyers are paying cash for their property, a sign that more buyers are likely using money inherited from older generations to finance their purchases.
Last year, 1 in 10 first-time buyers made an all-cash transaction, according to a new report from the National Association of Realtors, the fourth straight year with an increase, and the largest share since the trade group began collecting data on such transactions in 2003. Among all-cash first-time buyers, 28% said they used an inheritance to help finance their transaction, compared with just 9% of first-time buyers who did. financed.
As home prices approach all-time highs and mortgage rates remain above 7%, excluding many potential buyers, a portion of those buyers may simply be waiting for an inheritance or other significant help from wealthy baby boomers or members of the Silent Generation.
“It is critical when analyzing first-time buyers to understand that there is a growing divide between those who save independently and who do not want to move into home ownership, versus those who wait on the sidelines but then benefit from a generational wealth transfer,” the report says.
Buyers who rely on wealth transfers are different from those who finance and use their own savings. As modern life expectancy increases, delaying inheritances, first-time cash buyers have typically reached middle age. According to the report, the median age of first-time buyers paying all cash is 54, significantly older than the median age of 38 for first-time buyers financing their home.
Claire Boston is a senior reporter for Yahoo Finance, covering housing, mortgages and home insurance.
Gn bussni
