Posted by Matt Curtis on Tuesday, July 19th, 2022 12:22pm.
I want to talk to parents of millennials, and even grandparents of millennials, and offer the best real estate advice for our current housing market. The United States real estate is at an inflection point with high prices and high-interest rates. The bad news is the recent challenges we see with millennials and the housing market will not go away soon. The good news is that the Fed is starting to slow down demand. However, due to 5.5 million home deficit in this country, the Fed will unlikely slow down demand at a reasonable rate required for equilibrium to occur in the housing market.
Being a parent has me thinking about how I can help my kids and future grandkids set up for success. Why is this on my mind? Because the average net worth of a renter in this country is only $6,300 versus $255,000 for a homeowner. That was a 2019 status, and the difference is bigger today.
A millennial parent or grandparent needs to ask “Do I want my kids and grandkids growing up in an apartment with an average net worth of $6,00, or do I want them growing up in a home with an average net worth of over $255,000?" Consider helping your millennial kids and grandkids by tapping into equity for a head start that will help in their lifetime.
One example that I was thinking of is opening a home equity line of credit. Say you have a home with a value of $400,000 and owe only $200,000 on that; you could get a home equity line of credit for $40,000 and gift that toward your kids to give them a down payment on their first home.