Housing market expert warns first-time homebuyers relying on 'the bank of mom and dad'
Redfin reports nearly 40% of home buyers under 30 use family money to help purchase property
US housing market will go 'hard into the runway' soon: Jim Tobin
National Association of Home Builders CEO Jim Tobin reacts to declining construction sentiment and says the government needs to 'be a helping hand.'
The "nepo" home buyer has shown resilience in today’s volatile market, and one housing expert is warning "anything goes" to get deals done.
"I think what you really have is that the demand is incredibly high for first-time homebuyers, and the only way they can afford a home is the bank of mom and dad," National Association of Home Builders CEO Jim Tobin said on "Varney & Co." Tuesday. "That's really the story here. There just isn't a supply for them to go out and save for their own down payment."
According to a survey from Redfin, 38% of recent homebuyers under the age of 30 reported either using a cash gift or inheritance from family in order to place a down payment on property.
"I think today anything goes. That's my opinion," Tobin reacted. "Whether underwriters are looking at that, they want to make sure you have the ability to repay, not whether you can get some down payment to make that mortgage more affordable upfront."
THE FED IS LIKELY DONE WITH INTEREST RATE HIKES: M.B.A. FORECAST
Confidence among builders in the U.S. housing market plunged for the third straight month in October as a spike in mortgage rates continued to weigh on consumer demand for new homes.
National Association of Home Builders CEO Jim Tobin warned "anything goes" in the current housing market, where some young homebuyers are using family monetary assistance to cover down payments. (Fox News)
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, fell five points to 40, the lowest reading since January 2023. The decline followed a five-point drop in September.
Meanwhile, rates on the popular 30-year fixed mortgage are currently hovering around 7.57%, according to Freddie Mac, well above the 6.92% rate recorded one year ago and the pre-pandemic average of 3.9%.
Housing affordability phenomenon is very real: Tiana Lowe Doescher
Washington Examiner columnist Tiana Lowe Doescher and FOX Business' Lydia Hu join 'Making Money' host Charles Payne to discuss the impact of the housing crisis on young people.
Tobin argued many parents and family members know that the "road to wealth" in America begins with homeownership.
"Homeownership is a true gateway to the middle class. And if you can help your kids get that leg up early, they're going to do everything they can," the CEO said. "It's the American dream, homeownership."
Expanding on the declining home builder sentiment, Tobin explained the cause as a lack of supply and rising interest rates.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Kevin O'Leary: 'More cracks' being seen in commercial real estate
O'Leary Ventures Chairman and 'Shark Tank' investor Kevin O'Leary weighs in on a looming government shutdown, Gary Gensler's digital currency hearing and stocks in trouble.
"That is the absolute end all, be all," he noted. "We have got to get the Fed to put the brakes and publicly say out loud, we are going to stop rate increases. In fact, we asked them last week to do that with our friends at the Mortgage Bankers and National Association of Realtors. It's time for the Fed to pump the brakes on rate hikes."
"Home prices are extraordinarily high because as much as our builders are trying to build as much as they can, there's just not enough to keep up with demand, even though interest rates are tempering demand," Tobin continued. "We still need more supply on there to dry prices."
FOX Business’ Megan Henney contributed to this report.