Can we talk about parents buying their adult children luxury homes

[Anonymous]

Anonymous wrote:Wait, a parent not paying for dental school, but willing to pay for a house?

Dental school is notorious for extremely high loans and little payoff.

At least with a house you'll get great appreciation over a long period of a time and a place to live.

https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975

[Anonymous]

Anonymous wrote:Wait, a parent not paying for dental school, but willing to pay for a house?

She required a post bacc to get into dental school and would only do it at NYU plus it took her an extra year to finish so her parents made her pay for some of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Oh please.

My parents did this, and it helped us build equity in a good investment. After a while we sold our first home and bought our second without any additional help.

It’s not different than any other advantages the well off have.

Did you pay your parents back the initial sum they gave you from the equity? I can’t imagine just keeping such a large sum of ‘help’ if I was able to pay it back. Dh and I did the normal scrimp and save for our first starter home and built our own equity. It’s much more satisfying knowing mommy and daddy didn’t do it for us.

+1 completely agree. I feel like it would be embarrassing and infantilizing to accept so much money for a house when you could afford one on your own, just not an 800k one

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think this is a "trend" per se, it's just parents giving their children what they can afford. In your instance, you are hanging out with people whose parents can afford to help with $800+ homes.

This is very common in other parts of the world. The childhood home I grew up in (not here) was given to my dad by his parents.
My DC are preschoolers now, but when the time comes, if I can afford to do it, I will absolutely help with housing.

Sure, I think it's one thing to help with housing, it's another to put them in a home they would never get close to be able to afford. Forgetting even just the principle and interest on these mortgages the property taxes and maintenance alone on these houses would take a chunk out of their salary. There is also the matter of what others in their circle think or know of them. I feel like this is almost a face saving or vanity measure for the parents. Yeah my kid only makes 55K but if I put them in a 800K house nobody will think that, they'll think they're "winners" just like me.

I mean...a $800K in a HCOL area is a starter home anywhere else. You're looking at the price tag instead of the actual house, square footage, and amenities.

Would you prefer the parents let their $55K/year kid buy a trailer home and raise their grandchild there? Because that's what the income affords without intervention.

55K only gets you a trailer home in DC SF or NYC. You can buy a home or an apartment in another town that isn't HCOL after all even with the housing boom now the median home price is around 350K . They are also not necessarily buying them in HCOL areas, just stated it to make a point that the parents could afford to do this or that the children were accustomed to luxury housing. One of them bought in a suburb of Austin TX and at 800K they are living in 4500 sq ft new built Spanish style home with a private pool

The suburbs of Austin have homes in the millions. If the parents want to get their kids a nice home, a place they'll visit and love, I don't see what the problem is.

In fact, as far as wealth transfers go, its a smart option.

And Boston and pretty much the entire East and west coasts.

A house in my neighborhood (Boston burbs) of 1940s capes was purchased in 2018 for 710 and was just listed fir $1.1. 1,700 square feet.

Also agree it is a very smart move to improve generational wealth. A few older neighbors with 20-somethings living at home are considering pulling their $700+ in equity, down sizing to a local condo and helping their kids buy their own home.

[Anonymous]

Honestly, if the parents are planning to leave substantial inheritances to their kids after they die, it’s probably better for them to gift it to them earlier in their children's lives when it will make a difference. Buying them a house is a totally reasonable thing to do if that’s the financial situation they’re in. And giving their children the flexibility to stay home and raise their kids if their kids want to chose to do that is a much better use of their money than waiting until they die and passing it on to retired children who have worked and possibly struggled their whole lives.

[Anonymous]

I think some others have mentioned it but.. where are the luxury homes for 800k? Even 900k? I'm thinking about buying a fixer upper for 750k+...

[Anonymous]

Anonymous wrote:I trust you are reading the news about the increasing gap between the haves and the have nots? This is what it looks like to build generational wealth.

This, it’s a very efficient way to pass down wealth because it both lifts a major expense from the kids and it gives them an asset that should appreciate.

[Anonymous]

Anonymous wrote:Oh please.

My parents did this, and it helped us build equity in a good investment. After a while we sold our first home and bought our second without any additional help.

It’s not different than any other advantages the well off have.

And I am sure you paid your parents back for all that they did for you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Oh please.

My parents did this, and it helped us build equity in a good investment. After a while we sold our first home and bought our second without any additional help.

It’s not different than any other advantages the well off have.

And I am sure you paid your parents back for all that they did for you.

If parents are trying to pull kids into the UMC, they don’t want to be paid back after they transfer wealth

[Anonymous]

Tax the shit out of it. This is what privilege is.

[Anonymous]

I will say helping your kids get their first true starter home (a townhouse, condo, etc) is one thing. But and $800,000 home is not that and even in this area (suburbs) is a pretty decent home. Perhaps the parents feel guilty that their kids obviously are not good with money, I don't know.

OP, just know that you can actually get there on your own (my husband and I did) but it takes a bit longer and being smarter.

My parents did end up gifting us a large sum of money later that we have since invested for the future - so I am not criticizing generarational wealth. The difference will be that your friends will probably NOT have their own wealth to pass on, where you will.

[Anonymous]

Anonymous wrote:I trust you are reading the news about the increasing gap between the haves and the have nots? This is what it looks like to build generational wealth.

Yes, it amounts to a real estate investment for the parents, enjoyed by the children now, the proceeds of which will passed on to the children as inheritance. Like a vacation home the kids actually live in.

[Anonymous]

We are in the midst of the greatest intergenerational wealth transfer in history. Yes, it's always been a thing to help your kids but what we are seeing is bigger in scale than anything we've seen before.

https://www.forbes.com/sites/markhall/2019/11/11/the-greatest-wealth-transfer-in-history-whats-happening-and-what-are-the-implications/?sh=541165b14090

[Anonymous]

Excellent idea. Parents can even help with the mortgage with nobody noticing $3000 cash a month going towards it as long as the children are working.
Didn't the parents benefit from great economy? Since government can't fix the housing costs and have good jobs with pensions, parents will do their best to help.
What I have been wondering is why more parents don't do it? They had 40+ years to build wealth.

[Anonymous]

What else do you propose that people of means do with their money?

My in laws came from nothing and with hard work built a small fortune. It was obvious they planned to leave everything to their kids. A couple of decades ago my spouse approached them and basically said "our family doesn't need anything but nieces and nephews sure do. It's your money and no one is expecting anything but if you're planning on leaving money to them wouldn't you rather help them now when they really need it and see the results of your generosity?"

At that point they started giving, and college tuitions were paid. Made a huge difference.

We're now doing something similar for our kids when it comes to housing. This is an extremely high COL area. We're helping our kids get into housing, and we're helping them a lot. We can afford it. So what exactly is the problem?