Achieving home ownership for many has been the cornerstone of their financial stability for centuries. In pursuit of the “American dream,” many baby boomers have found themselves “rich” in property, as property values have continued to skyrocket over the past five years. Although very grateful for their own good fortune, many baby boomers are now seriously concerned about the prospects of their children ever being able to buy a home. With the median sales price of a home in California exceeding $550,000, less than 14% of all California households may qualify. Ability to qualify is based on buyer coming in with a 20% down payment and using a 30-year fixed rate loan with current interest rates of 6% or slightly higher. If the income of the offspring of the baby boom generation is analyzed separately, it is even less likely that they would qualify.
The California Association of Realtors and the National Association of Realtors have identified housing affordability as one of the critical issues facing the industry. Many cities, in response to calls for action, have begun working on policies to help make housing more affordable. The Homeownership Alliance, an alliance of trade associations from various industries and non-profit associations, has released a survey of different programs across the country that have been recognized as providing viable solutions to this problem. Ultimately, the health of the real estate industry depends on the purchasing power of buyers, providing those who wish to sell with the buyer pool and the means to do so. If you are interested in reading the full report, you can find it on the Homeownship Alliance website.
Baby boomers who want their children to enjoy the benefits of homeownership can help their children by teaching them what homeownership entails. The sooner a parent can get her child started on such an investment, the more likely the adult child will be successful. There is hardly a better time than the present, if the ability is there. Today’s real estate environment has generated enormous amounts of capital, and there is no one more capable than the baby boom generation to help “our” children ensure that they can afford a home. Our children will usually look at what we do successfully and use it as an example of how to live their lives. If we are spendthrifts, it is quite possible that young people are too. If we are frugal and prudent in our spending and asset acquisition, chances are your children will be too.
This mentoring usually happens subconsciously and is even more powerful if you pay conscious attention to the fact that your children are watching you. As a method of instruction, a parent could help their adult child purchase a property jointly with them and assist them in managing the property. Over time, as they learn to handle finances and investment management, the parental decision to split the earnings may be made. Eventually, the father can help his children gain financial independence by making the decision to split the earnings, or by “gifting” his (the parents’) interest to them as a reward for the successful completion of the “mentoring” program by the father. adult son. It would be wise to check with your accountant to see how this would directly affect your particular tax situation.
It’s usually best to engage with your adult child’s transition this way: Be available to offer sound financial advice and guidance along the journey rather than provide a lump sum of money that can be wasted on frivolous or unworthy assets. they are appreciated.