“Mom, Dad, will you cosign my mortgage, please?”

In the last few years, it’s been even harder for young adults to achieve the milestone of homeownership. According to census data, in the first quarter of 2024 the median price of a home was over $420,000. Before the pandemic, the median was about $100,000 lower.

According to a Freddie Mac analysis, young adults are increasingly reliant on help from an older adult, like a parent, to buy a home. The share of young homebuyers who have cosigned a mortgage with an older adult has grown since 1994.

Abha Bhattarai at The Washington Post recently wrote about first-time buyers seeking help from a parent to achieve their goal of ownership. Bhattarai joined “Marketplace” host Kristin Schwab to talk more about this trend. The following is an edited transcript of their conversation.

Kristin Schwab: So, when I first saw your story, I figured this was maybe about parents giving their kids cash for a down payment. But it seems like there are a lot of ways parents are helping out. What are they?

Abha Bhattarai: Yeah, there are so many ways that parents are helping their children. And I think, like you, I assume that help with the down payment, sort of a cash gift, was going to be what we ran up against the most. But it turns out, in part because housing has become so unaffordable — home prices have gone through the roof in the last few years — that a lot more first-time buyers are needing help from their parents to actually cosign those mortgages because they maybe don’t even have the incomes to qualify in the first place.

Schwab: Yeah, an increasingly popular route is also taking out a home equity loan, right?

Bhattarai: Yeah. Some of the parents I spoke to had borrowed against their existing homes and were lending that money to finance their children’s homes, thinking that it was sort of a better transaction than having to pay 7%, or whatever the going rate for mortgages is, to the bank.

Schwab: Borrowing against your house requires you to own a home to begin with, but a lot of the families you talk to are not exactly wealthy ones.

Bhattarai: You know, it really runs the gamut. And one of the leading concerns among the housing economists that I talked to about this trend is that as it becomes more necessary for parents to step in and help their children buy their first homes, it has the effect of making it that much harder for other people to break into the housing market when they don’t have that help. And so, we’re exacerbating inequality in a lot of ways by having to rely on so much financial help from parents.

Schwab: Why do you think so many parents have been willing to step in and help their kids acquire a home?

Bhattarai: I think for so long we’ve thought of homeownership as this really important milestone. I mean, it’s the American dream. And for a lot of families, it’s the most surefire way of accumulating long-term wealth and generational wealth that they can pass down. And I think parents are starting to realize that if they have the means to help their children, that maybe it makes sense to help their children. And a lot of the Realtors I talked to said that many families were now thinking of helping their children buy a house as sort of a generational family transaction instead of just a onetime gift to their children.

Schwab: Yeah, very different framing. On the other side of the equation, it seems like a lot of the young adults you spoke to seem to sort of have to put away their pride in getting help. Did they expect to need that from their parents to help them buy a home?

Bhattarai: Almost everybody I spoke to said that they really had wanted to buy a house without the help. But at the same time, they said, you know, the market is so tough right now, and they just kind of worried that if they didn’t take this help now that it was going to be that much harder for them to buy a house in five or 10 years, whenever that might be. And so I think that is sort of changing the equation a bit for a lot of people. And it’s changing the way that young adults and their parents are thinking about how they buy a house and the way they talk about it. A lot of Realtors said that there just was less shame around it. You know, this used to be very common for parents to help out, but people didn’t really talk about it. And now, the housing market has become so tough that it’s kind of like, well, of course I need my parents to help out. And so that’s sort of taken away the stigma a little bit.

Schwab: I hate to end on a sour note, but where might this leave people who don’t have the resources like a family home or parents to lean on when it comes to homeownership?

Bhattarai: You know, it’s not clear just how permanent these shifts in the housing market are. We are starting to see homebuilders build a lot more homes, especially smaller, entry-level homes. At the same time, we might start to see prices eventually come down and interest rates could come down in the next several months. And all of that could change the dynamics a bit here. But for now, it’s really tough for first-time homebuyers to break in.