Parental help with the house

R

roundcorners_IHB

New member
The speculation this week with our new member Battie was over how, he was able to afford a SFR in Irvine at 25. Many including myself automatically assume some sort of parental help either with the down payment or monthly payments. For most couples in Irvine (I can name at least 10) they were ONLY able to buy because they had some sort of parental assistance. One reason for this phenomenon is that baby boomers parents are dumping all their assets so that they can possibly get more social security income and pay fewer taxes when they retire. I know of a few friends whose names are going to be on the title of their parents homes; the parents of course are still going to subsidize property taxes.



Although not limited, the Asian culture is known for these kinds of asset co-mingling. There is no differentiation between the monies of the parents and the children. One friend comes to mind, where he has full access to all of his parent?s bank accounts; he manages and moves monies back and forth between his parents and his personal accounts. The problem always comes when the wife feels "left out" in the families? finances. My wife often hears earfuls of stories where they simply have no opinions in family decision and matters. They often feel unable to voice strong opinions regarding child rearing and lifestyle choices; because the in-laws essentially bought their house and their lifestyle.



I wonder how many of you had some sort of help from the parents. But mainly how has this affected your relationships with your parents and your spouse. Indeed there is something to be said about "leave and cleave". I also like to see if there are cases where healthy boundaries are drawn while accepting parental "gifts".
 
Wow, I?m surprise that no one responded to this thread. I thought I would be touching on a relevant topic that has never been addressed before on the IHB.



In case any of you thought the examples above are a little extreme; I have yet to report that we meet another person yesterday; whose parent has bought them a house free and clear. This time it is a young Taiwanese lady, although she?s a single pharmacist; she admit that without her parents help she would not have been able to purchase a SFR in Quail Hill. We didn?t pry to figure out which community, but we can figure that it?s a pretty big house, for just herself.



The one big ?Pink Elephant? in the room is parental assistant. I have strong empirical data to show that it is a huge factor of Irvine RE and no one seems to be addressing it. I believe the reason, why we haven?t seen such a huge drop in Irvine prices is that retiring baby boomer parents are dumping (passing) huge amounts of their nest eggs on to their children. Panda?s ?Foreign Chinese Buyers? legend is actually parents who are buying houses for their 30 something children. I?m not sure how this one factor will skew the IHB timeline; but I think it certainly will play a large role in what we think is the bottom.



I don?t think I?m going too far in saying that median income is practically irrelevant in Irvine. The average Irvine household can not and will not EVER be able to afford the average move-up Irvine home without some sort of parental help.



Again, what I mean by parental help have range from: helping with renovations, down payment, monthly payments, live-in child care, co-sign loan, and purchasing the house with 100% cash.



Those of us who aren?t so lucky to have ?rich? parents can finally make plans B & C, to buy else where when the time comes. We can all hope that IR is right and the bottom does drop out in Irvine for the average buyer.
 
the difficulty with the topic is it's completely speculative unless someone wants to chime in and tell everyone how mommy and daddy bought them a house. and even then, like the FCB theory, it's hard to believe it would be so prevalent as to make fundamentals like median income irrelevant or in some way skew macro trends in the housing mkt even locally.
 
I left my father's home when I was eighteen with my car that I had paid for and clothes that he had paid for. The gift he gave me was an expectation of nothing from him or anybody else.
 
I don't have any FCB stories, but my observation is that the "F" in FCB might be overemphasized. Parents will usually help their kids if they're able, regardless of where they're from. I can give some details to my circle of 30-something friends.

Couple 1: 2nd and 3rd gen asians, had help with buying a $400k+ home shortly after a paid-for wedding

Couple 2: White, received some fairly minor--but necessary--help in buying a $750k duplex

Couple 3: Mixed, received downpayment from parents to purchase ~$600k home shortly after a VERY expensive wedding

Couple 4: Mixed, don't think they had any parental help to buy a $300k home, but not certain

Person 1: 2nd gen asian, liquidated all assets to purchase a $400k home; they might have had some help, but not much

Person 2: 2nd gen asian, received a LOT of help to buy a condo, I think it was over $500k

Me: No help in buying a house, and I don't expect any when I gete married.



The rest of my friends are renters for the most part (one person gets a discounted rental on one of his parents' property), or I just don't have a clue on how much help they may have received.
 
[quote author="Astute Observer" date=1233629756]There are very few gift that are truly free and clean. My parents were never in the position to give me any gift other than nominal ones, but if they do, there would always be some string attached.</blockquote>


Isn't the usual Asian method that the parents buy their kids everything ... but later the kids have to provide for their retirement (ie. provide income, & later let parents move in and cater to their every whim when they get really old - no nursing homes there).



Freedom & a rental is better, at least for me.
 
Few will admit that their home was purchased with the help of their parents. New homes purchased by a younger Asian couple today often with the parents assistance. As IR has pointed out in numerous posts I began researching this subject about 6 months ago regarding a high number of Chinese HELOC abuse. Older parents took equity from their long ago purchased home to help their children in purchasing a home within a reasonable vicinity of where they live. The motive was to keep both or even 3 generations together in close proximity.



Chinese parents knew that their children do not want to live with them under the same roof but by assisting with the down payment or even more their children at least would be within the same zipcode. While the parents were younger they dreaded living with PoPo (old grandma) and her bad habit and attitude. My observations included studying the patrons who seated at the large round tables at China Garden. Most hardcore Chinese prefer China Garden over pricey Sam Woo for a large party dining.



I also interviewed the regulars who are Irvine residents. It is easy to spot them. Out of town visitors often are over dressed while the locals are dressed much casually. The parents always arrive early and decided on the menu while the children and grand children arrive later. I could always tell from the grand children if they are local residents. The teenagers will often wear school related apparels and the toddlers or infants rarely have an over stuffed diaper bag.
 
Don't know if this helps the conversation.

I bought my first home for $118,000 in Compton and had two roommates to help with the payment. I think my father may have said congratulations.
 
I wouldn't want help from my parents to own part my home. However, it may be because I don't need it. I would only take it as a gift, but not a loan, otherwise it wouldn't make sense to me.



I'm taking care of my own business.
 
[quote author="awgee" date=1233640343]Don't know if this helps the conversation.

I bought my first home for $118,000 in Compton and had two roommates to help with the payment. I think my father may have said congratulations.</blockquote>


Wow! I was working in Torrance by Crenshaw and PCH in the mid 80's. Compton was rough back then and even rougher now. Why did you choose Compton? There are some decent area around there by the Court House but I sure did not feel safe and I live in SA.
 
I would like to see some statistics on that. I am Asian, and my experience has been pretty much a crapshoot. Majority don't get help, but quite a few do. I can't imagine that the figure would be something statistically significant.
 
[quote author="bkshopr" date=1233643676][quote author="awgee" date=1233640343]Don't know if this helps the conversation.

I bought my first home for $118,000 in Compton and had two roommates to help with the payment. I think my father may have said congratulations.</blockquote>


Wow! I was working in Torrance by Crenshaw and PCH in the mid 80's. Compton was rough back then and even rougher now. Why did you choose Compton? There are some decent area around there by the Court House but I sure did not feel safe and I live in SA.</blockquote>


I had no idea you lived in SA, although from your knowledge, I could have guessed. Which neighborhood? Is your own garage attached or not?
 
[quote author="gepetoh" date=1233646155]I would like to see some statistics on that. I am Asian, and my experience has been pretty much a crapshoot. Majority don't get help, but quite a few do. I can't imagine that the figure would be something statistically significant.</blockquote>


Chinese parents are strict in many ways in raising their kids. When the kids need the down payment they help out with what ever they could and that included the HELOC they took out. I talked to many sales managers in numerous Irvine projects.



The figures were significant enough that contributed to 38% Asian buyers and Chinese was the dominant segment in Irvine.



I am sorry that your parents did not have the ability to help you out. Other Asians such as Vietnamese, Japanese, and Korean are tighter with their money. Which group do you fall into?
 
[quote author="tmare" date=1233646321][quote author="bkshopr" date=1233643676][quote author="awgee" date=1233640343]Don't know if this helps the conversation.

I bought my first home for $118,000 in Compton and had two roommates to help with the payment. I think my father may have said congratulations.</blockquote>


Wow! I was working in Torrance by Crenshaw and PCH in the mid 80's. Compton was rough back then and even rougher now. Why did you choose Compton? There are some decent area around there by the Court House but I sure did not feel safe and I live in SA.</blockquote>


I had no idea you lived in SA, although from your knowledge, I could have guessed. Which neighborhood? Is your own garage attached or not?</blockquote>


Actually I knew very little about SA compared to many other cities. You should have already known the answer when you read most of my posts. Here is a hint: I lived in the same house Diane Keaton grew up in.
 
[quote author="bkshopr" date=1233643676][quote author="awgee" date=1233640343]Don't know if this helps the conversation.

I bought my first home for $118,000 in Compton and had two roommates to help with the payment. I think my father may have said congratulations.</blockquote>


Wow! I was working in Torrance by Crenshaw and PCH in the mid 80's. Compton was rough back then and even rougher now. Why did you choose Compton? There are some decent area around there by the Court House but I sure did not feel safe and I live in SA.</blockquote>


Sorry, it was awhile ago and I was confused. It was Carson, which actually was not a lot better. There was graffiti and gangs, but it was the only area I could afford that was close enough to work.
 
[quote author="awgee" date=1233650030][quote author="bkshopr" date=1233643676][quote author="awgee" date=1233640343]Don't know if this helps the conversation.

I bought my first home for $118,000 in Compton and had two roommates to help with the payment. I think my father may have said congratulations.</blockquote>


Wow! I was working in Torrance by Crenshaw and PCH in the mid 80's. Compton was rough back then and even rougher now. Why did you choose Compton? There are some decent area around there by the Court House but I sure did not feel safe and I live in SA.</blockquote>


Sorry, it was awhile ago and I was confused. It was Carson, which actually was not a lot better. There was graffiti and gangs, but it was the only area I could afford that was close enough to work.</blockquote>


Much better! The industrial complexes owned by the Watson Land Companies and the railroads are excellent buffers of criminal elements. Were you there when Stor was at the Carson mall before IKEA? Remember the billboard above the huge mannequin along the Carson golf course side of 405? "Coto is what life is all about !""
 
Thanks for chiming in everyone...



Sorry, for being scientific (much like BK) my ?empirical? data are simply observations. I would asking acquaintances around town where they live and how the heck they were able to pay for it. Time and time again; the parents had a huge hand in the purchase. For my circle of friends, I say more than 90% had help, an overwhelming majority.



I like to hear more stories, again I?m not condemning parental help. Be proud and feel blessed that your parents are able to help. The thread is viewed more than 550 times, and the only ones that respond are the ones who didn?t get or want parental help. I know there are more of you that lurk the IHB. Much like Awgee, I?ll be lucky if my parents give me a plant for the new condo?
 
Many may have purchased their homes with a gift from parents. I would admit my first home was purchased with a down payment from my poor Mother's life insurance policy. She withdrew the money with interest. My conscience was not at peace ever since and I paid back the sum with 24 years of interest.
 
[quote author="roundcorners" date=1233651955]Thanks for chiming in everyone...



Sorry, for being scientific (much like BK) my ?empirical? data are simply observations. I would asking acquaintances around town where they live and how the heck they were able to pay for it. Time and time again; the parents had a huge hand in the purchase. For my circle of friends, I say more than 90% had help, an overwhelming majority.



I like to hear more stories, again I?m not condemning parental help. Be proud and feel blessed that your parents are able to help. The thread is viewed more than 550 times, and the only ones that respond are the ones who didn?t get or want parental help. I know there are more of you that lurk the IHB. Much like Awgee, I?ll be lucky if my parents give me a plant for the new condo?</blockquote>


I hope the plant does not have red foil to hide the cheap plastic container or a poinsetia in the month of January!
 
Parental help could be billed more as early inheiritence. People want to see the positive effects of the money that their beneficiaries will inheirit prior their untimely deaths. Personally, i think it's sad that parents don't want to help their kids out with a home purchase, especially if they have the means to do so. Of course, the kid has take responsibility, find the home, perform some dd, and have an income to support the mortgage. Seems like in this part of the country, if you don't have an advantage or a helping hand, you're stuck in IAC.



Also, I think those helping parents (aka the baby boomer generation) could represent the economic peak of the 20th century (pensions, rapidly increasing stock index, reaped the benefits of homeownership). I don't think next future generations will do as financially well and that the source of most U.S. wealth will be through inheiritence. God help you if your parents don't have a net worth over $2m. There's always a disconnect, everytime i do the math on my retirement fund based solely on a 401k, ira and ss, and the lifestyle I would like to have.
 
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