Young homebuyers are relying less for down payment assistance

Wages are increasing and that’s helping young homebuyers to save for their down payment out of their paychecks rather than tapping friends, family, or other non-traditional sources.

A survey from Redfin has found that many alternative ways of raising the funds required for a down payment have been used by fewer millennials, while paychecks are the source for 72% of respondents (up from 69% in 2018).

"Unemployment is at its lowest point since 2000," said Redfin chief economist Daryl Fairweather. "Millennials have never worked in an economy this strong before and are now finally making enough from their paychecks to save for a home. The fact that they are less often needing to rely on family members or sacrificing retirement savings to fund a home purchase is another sign that millennials are finally gaining their financial footing."

When asked how they accumulated the money needed for a down payment, first time homebuyers born between 1981 and 1996 answered:

• Earnings from secondary job: 24% down from 36% last year.
• Cash gift from family: 18%, down from 24%
• Sold stock investments: 9%, down from 13%
• Pulled money from a retirement fund early: 7%, down from 13%
• Contributed less to retirement savings: 6%, down from 12%
• Inheritance: 6%, down from 12%

With the sharp fall in the value of cryptocurrencies such as bitcoin, this source of down payment saving fell to just 3% in 2019 from 10% in 2018.