Staying Longer With Family May Be The Financial Boost That You Need

“Incubated homebuyers” are on the rise today. In this context, “incubation” is the time spent living in the family home purposefully saving your earnings toward a down payment.

According to recent data from the National Association of Realtors (NAR), around 24% of homebuyers aged 24 to 32 moved directly from a family member's home when purchasing their first home, representing a significant portion of first-time buyers.

First-time homebuyers are typically perceived as people who have been renting for a while, and now they are ready to purchase their first home. But the data reflects that there are many people who go from living with family and paying little or no rent, then moving directly to purchase their first home without ever renting outside the family home.

Incubated homebuyers may have different advantages compared to renters:

Without the burden of hefty rent, incubated buyers can use their income to pay down debt or to save up faster for a down payment.

With larger cash reserves, incubated buyers may have more options to relocate to another city, or they may have more choices to buy a home in the same city where the family home is located.

If they’ve saved up at least a 10% down payment, incubated buyers can purchase an investment property first and choose not to live there but rent it out for income instead.

That way they can reserve their chance to purchase another property using a 3% to 5% down payment program geared toward owner-occupant buyers.

Their parents or grandparents may be ready to “cash out” and relocate to a nice retirement destination, creating a chance for the incubated buyer to purchase the family home … possibly at a discount.

Incubating is not necessarily all roses. Perhaps the biggest challenge is being willing make large monthly payments for a mortgage after you’ve gotten comfortable paying very little for housing each month.

Renters, on the other hand, are likely to be eager to transition from renting to owning if it is affordable. It all depends on your perspective (your Ownerscope).

Talk About It: PRESSURE or PRIVACY?

Not all of us are comfortable with the idea of staying longer in the family home.

Ask a friend: Have you felt pressured to move out by a certain age, or have you just wanted more privacy to live your life?