Can we talk about parents buying their adult children luxury homes

[Anonymous]

Anonymous wrote:

Anonymous wrote:We do not come from money, like at all. My mom is gambling away any inheritance that I may have received, and my in-laws are absolutely broke. My husband and I are totally self-made and we bought our $900k home in the DMV a year ago at 30 with no help at all. I’m proud of us and I actually feel a bit sad for people who don’t get to see the fruits of their own labor everyday to the extent that we do. I love our life (and home) because we made it happen.

Well done, PP

Just because my parents gave us some help with our first house (which was 20 years ago now) and a few other things doesn't mean we haven't worked hard at our jobs and earned our own money of which we are proud...and I did try to give my parents back the money. They 100% didn't want it - they are wealthy and it gives them pleasure to help out while they are still alive versus when they die. Win Win for all of us.

[Anonymous]

It's one thing to give a helping hand it's another thing to just give into your adult children. The idea that this will preserve or grow generational wealth is unlikely over many generations. Most of the heirs get lazy and then over the generations the go broke or stagnate/lose wealth relative to inflation because they don't need to do anything.

[Anonymous]

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 don't see why that matters. DH and I received no financial help from our parents towards housing, but many of our friends did. I'm happy for them and don't judge them for living in a house they couldn't afford to live in without help.

This. I fully intend to use my money from my hard work on my children. If others don't like it, too damn bad.


Agree. Unfortunately, with Biden's inflation seems like we will all need to help our kids with housing at this rate.

[Anonymous]

Anonymous wrote:It's one thing to give a helping hand it's another thing to just give into your adult children. The idea that this will preserve or grow generational wealth is unlikely over many generations. Most of the heirs get lazy and then over the generations the go broke or stagnate/lose wealth relative to inflation because they don't need to do anything.

You have no clue what you are speaking about ... I have many friends who have helped their children with down payments to get into homeownership. These kids are hardworking and great citizens who give back to those communities on their own (including their tax dollars that come with home ownership), their parents are not there maintaining the house and paying the utility bills. These kids got a helping hand (kinda like what Biden is doing with all his freebies) and they will make of it what they will, but they are far from lazy and directionless.

[Anonymous]

Anonymous wrote:It's one thing to give a helping hand it's another thing to just give into your adult children. The idea that this will preserve or grow generational wealth is unlikely over many generations. Most of the heirs get lazy and then over the generations the go broke or stagnate/lose wealth relative to inflation because they don't need to do anything.

Exactly. Generational wealth (in smaller sums) will eventually be lost because adult children either don't know how to maintain or continue earning. 2-3 generations down, kids get lazy and then you have out these handout houses. Great way to deplete the pot.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We do not come from money, like at all. My mom is gambling away any inheritance that I may have received, and my in-laws are absolutely broke. My husband and I are totally self-made and we bought our $900k home in the DMV a year ago at 30 with no help at all. I’m proud of us and I actually feel a bit sad for people who don’t get to see the fruits of their own labor everyday to the extent that we do. I love our life (and home) because we made it happen.

Well done, PP

Just because my parents gave us some help with our first house (which was 20 years ago now) and a few other things doesn't mean we haven't worked hard at our jobs and earned our own money of which we are proud...and I did try to give my parents back the money. They 100% didn't want it - they are wealthy and it gives them pleasure to help out while they are still alive versus when they die. Win Win for all of us.

Yet, here you are bowing to the guilt of those who judge you by explaining that you wanted to pay them back. STOP. Your parents, I assume, worked hard to provide their children with a better life, there is no shame in that goal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's one thing to give a helping hand it's another thing to just give into your adult children. The idea that this will preserve or grow generational wealth is unlikely over many generations. Most of the heirs get lazy and then over the generations the go broke or stagnate/lose wealth relative to inflation because they don't need to do anything.

You have no clue what you are speaking about ... I have many friends who have helped their children with down payments to get into homeownership. These kids are hardworking and great citizens who give back to those communities on their own (including their tax dollars that come with home ownership), their parents are not there maintaining the house and paying the utility bills. These kids got a helping hand (kinda like what Biden is doing with all his freebies) and they will make of it what they will, but they are far from lazy and directionless.

According to this NASDAQ article "It is estimated that 70% of wealthy families will lose their wealth by the second generation and 90% will lose it by the third." https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10

[Anonymous]

OP, you are way too focused on income. Probably a big reason some of those people have lower paying jobs (hopefully that they like!) is because they have generational wealth that they calculate into their job decisions. Generational wealth is why I'm able to be a SAHM right now without stressing about potentially taking a pay cut when I go back. If parents are helping kids with houses, it's probably not a one-time gift thing, it's just estate planning. They may not even have a traditional mortgage, the house may be owned by a family trust or other entity. The house isn't "above their means" just because it doesn't match their W2. Their means include other income including generational transfers and probably also investment income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's one thing to give a helping hand it's another thing to just give into your adult children. The idea that this will preserve or grow generational wealth is unlikely over many generations. Most of the heirs get lazy and then over the generations the go broke or stagnate/lose wealth relative to inflation because they don't need to do anything.

You have no clue what you are speaking about ... I have many friends who have helped their children with down payments to get into homeownership. These kids are hardworking and great citizens who give back to those communities on their own (including their tax dollars that come with home ownership), their parents are not there maintaining the house and paying the utility bills. These kids got a helping hand (kinda like what Biden is doing with all his freebies) and they will make of it what they will, but they are far from lazy and directionless.

According to this NASDAQ article "It is estimated that 70% of wealthy families will lose their wealth by the second generation and 90% will lose it by the third." https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10

Honestly I don't feel that bad about leaving less wealth to my grandkids. The wealth was created by my great-grandfather, mostly, plus decades of stock market growth. If they want to be wealthier, they will need to earn more. As long as I pass along a healthy safety net, I'm fine with it. Our earned income is still very respectable and I think we are contributing members of society with a healthy and happy family. "Earn more than you inherited" isn't a very realistic standard in a wealthy family.

[Anonymous]

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

“Private pool?” Why the exaggeration? It’s a house with a pool.

[Anonymous]

Anonymous wrote:I would do the same for my kids given the chance.

I agree here. Plus most of this is the fault of locals who prevent more development and up zoning. Let property owners do what they want on their own property(like in Houston).

The reason property is so expensive is our fault.

[Anonymous]

Anonymous wrote:

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

It IS a little infantilizing. But my parents didn't earn that money either and it is coming to me one way or another, there is no way they could/will spend it all (although I'm always encouraging them to spend more). So the only way out of it is to never accept any money, and it maybe would be a little silly to draw the line at a house after college etc. Then when your parents die, you would have to wind down their estate and give everything to charity I guess. Which I would respect. But no, I didn't do it myself.

[Anonymous]

A free house without a person who knows how to maintain it will become a craphole in about 3 years.

[Anonymous]

The truly rich have always given everything to their kids as soon as possible. Donald Trump was being assigned ownership interests in properties and businesses when he was still a young child.

This idea that your kids need to work hard and eek out an existence all on their own is just a story that elites tell the middle and working classes to keep them locked out of the ownership class. In reality, look at how wealthy elites treat their own children.

[Anonymous]

They may have a lowly $65K/year job.....with a $900K/year trust fund. Just like my neighbor who worked for a DC-area university as an admin.