Parents helping their adult children buy homes: Raising the bar on good parenting?

In My Humble Opinion
41

One reason I created this thread is because I just bought my own house. I love my little house, and I am grateful that I saved up enough to buy it. I’m so happy I waited for as long as I did.

But for years, people lectured me on the “ills” of renting–intimating I was a fool for “throwing away money” every month. And for years I ignored them. Not just because they were wrong (I benefited from my years of renting), but because of the snobbery inherent in that statement.

And then I read that article and realized that a lot of sanctimonious homeowners are not “boostrappers”. They had help buying their first home. I wonder how many folks out there calling renters “fiscally irresponsible” were fortunate enough to have parents or grandparents willing to donate towards their downpayment. When the well-heeled apply social pressure on the less well-heeled to “do the smart thing”, you get the housing bubble burst of 2008 (thanks for the reminder, dracoi). You get people with working-class incomes trying to keep up with the comfortably middle-class Jones’s who live down the street, and making bad decisions in the process.

42

Well, if it makes you fell any better, Robert Schiller (the nobel prize winning Schiller in the Case-Schiller index) thinks those people lecturing you are full of shit.

House, fancy college, super thin waistline - all middle class ideals that have long since been debunked by science as being able to provide some sort of extraordinary financial and otherwise health and well being.

43

But life rarely is so cut and dried. There are a million and one circumstances that can tilt the balance. I can easily see a situation in which one kid is located in a tight housing market, has an okay job but little savings, and is trying like crazy to find a better place to live in for their family. If a great house turns up in the classifides, and mom and dad have a few thousand to spare to help with the downpayment, I could see the parents giving them that money gleefully. Them refusing to do so because the other adult kids might feel resentful–even though their situation and circumstances are completely different–strikes me as stingy.

To me, it’s kind of like a middle-class person getting bent out of shape because someone poorer than them gets a tax break. Would it be nice if everyone could get a bunch of money with no strings attached? Hell yeah. But sometimes life is not fair. Sometimes your parents are able to give your siblings stuff they can’t afford to give you. Shit happens sometimes. What’s the solution?

44

Sorry, I don’t see how family dynamics have anything in common with societal class warfare. I don’t care if my next-door-neighbor bakes pies for the old widowed lady who lives across the street while ignoring youthful, ambulatory, well-salaried me. But if our parents are baking you pies and overnighting them to your house on a regular basis, I’m gonna wonder why I ain’t getting none. Maybe they have a perfectly good reason (like maybe they don’t trust I won’t eat too much pie in one setting). But even when the reasons for imbalance are mutually understandable, they can still leave a bad taste in one’s mouth (the Prodigal Son story comes to mind).

It is relatively easy to maintain some degree of fairness between young children. If one kid gets roller skates on his birthday, it is a no-brainer to give the other one something comparable. But situations are a lot more complex with adults. So I can totally understand why parents would say “fuck it” and take a hands-off approach to their adult children’s financial lives (barring emergencies, of course).

45

Why stingy? I can think of a number of adjectives to describe this, but not stingy. They would be stingy if they never even considered helping anyone buy anything.

I’m not saying I think parents have to be “even stevens” down the line. But I don’t think parents should plan on unfairness. It would suck to have to hear, “Sorry, honey. We can’t help you with a downpayment on your house because we just helped your brother buy his.” I don’t know what the solution is. I’m just saying it would suck to be in this situation.

46

Depends. If both kids could get into Princeton but only the first one did because of money, then it would be unfair - and the parent should have held back money for the second.
If Cal State was the very best school the second one could get into, then it is fair. We figured the degree was important, not how much money we put into it.
Our first cost more than the second, but they both got to go to the schools they wanted to go to and the second has never brought up any difference in money.

47

Maybe stingy is not the best fit, so let me put it like this. Deciding to withhold financial help–even if that help could do a massive amount of good in your own kid’s life–out of fear of making someone else jealous, strikes me as unreasonably prioritizing feelings over practicality.

Well, yeah, this would suck. But like I said before, life is unfair like this sometimes, and usually it’s not planned. If there is no realistic way to guarrantee this will never happen, I don’t see the point in worrying about it. Our older sister often laments how she never had the expensive music lessons and summer camp experiences that we had, because our parents were broke and ill-informed when she was a kid. Do I sympathize with her angst? Yes. Do I think it would have been better if our parents had raised me and you without the lessons and camps, just to keep these equal between us kids? No.

48

But if our parents paid for music and camp for their grandchildren as a way to make it up to our sister (and to shut her up), I wouldn’t have a problem with that. If our parents brushed her off by saying “life is unfair, you ingrate”, I would feel like they were being dismissive of an understandable complaint.

Life is unfair. But it’s not like people can’t make decisions that mitigate unfairness. The implicit statement in “life is unfair” is “so quit yer whining”. This works when the family is comprised of robots. It’s not so easy when you’re dealing with human siblings.

49

I think this is relevant in many cases. It was for me. About ten years ago my parents loaned me about $7K to boost my downpayment on my first house. Just a few months after the purchase, they forgave the loan; that may have been their plan all along, I don’t know, it wasn’t due to any begging on my part. Due to a lifetime of scrupulously saving and investing they had retired a few years earlier with more than enough money for a very comfortable retirement, so I’m sure they looked at things the same way you describe, i.e. we kids are going to inherit their estate someday anyway, so why not hand some of it over now, when we can really use it.

More recently they’ve been transferring shares of some of their investments to me and my siblings, presumably in keeping with the same philosophy.

50

This is how things often shake out in the end, which is why the dilemma you’re talking about doesn’t rate high on my list of concerns. Kids who benefit from their parents’ largess typically end up paying for it later, either out of a sense of obligation or some other thing. No strings attached money is rare, because usually that kind of thing comes with some expectations of reciprocity. Like putting up with long visits and unsolicited opinions about finances.

51

I think you have to think about frames of reference. It would be wrong, I think, to put fairness ahead of being helpful/supportive within a very particular frame of reference–for example, in terms of time, to feel like if you give one kid $3K to help with closing costs on a new house, you have to give the other kids $3k this same year or else it’s unfair. Because that would just mean most years you don’t help anyone because you can’t afford to help everyone. There’s also category–just because you help one kid with housing costs doesn’t mean you have to help every kid with housing costs, because different kids have different needs. Maybe THIS kid has a fantastic opportunity to buy a house but needs help closing the gap, but THAT kid is later in a situation that they need a new AC right away. I’d rather my parents be able to help each of us how and when we need it than be concerned that each and every instance is followed by scale-balancing.

There’s also the fact that some kids just need more. I have a sister who struggles with mental illness and addiction. Over time, I’ve no doubt she’s received far, far more help from my parents than the other 5 of us kids combined. But, lord, should my parents have left her to rot in jail, let her have substandard medical care, let her lose all contact with her children, to really never even have a chance at not-miserable because they could not have afforded to provide that much support to the rest of us, none of whom had similar need? I cannot imagine begrudging her that. She’s still more miserable than any of the rest of us.

However, there should be a sense over time that parents don’t arbitrarily put one kid’s happiness over the others. I have seen that, and it’s toxic. I think it’s important that parents work to avoid this impression over time, but I also think it’s important that kids make sure they are taking the long view and not focusing on any particular moment.

That said, there’s no obligation to provide for your kids. I do think there is an obligation to live up to any commitments you make, however. I’ve known more than one family where the parents offer to pay for things, the kids make arrangements, and then the money isn’t forthcoming, or dries up. So you put your kids in music lessons mom agrees to pay for and after two months she decides she can’t cover it anymore.

Related to that, I think parents ought not give more than they can readily afford. I’ve also known several families where the parents love to be generous and give their kids too much money, but then have to come back and ask for money themselves, or decide that what they called a gift was really a loan. That sort of family dynamic makes it really hard for anyone to get ahead because anytime anyone has any kind of savings, someone else needs it, and you can’t say no because they helped you back when.

52

This is a common tax avoidance strategy for people who reside in states that tax estates, or tax estates valued in excess of $x (e.g. $500,000). Many older parents will start distributing money early to their children and grandchildren, up to the maximum allowed by law to be gifted tax free, so that by the time the taxable event happens (their death), the estate’s value has been reduced tremendously.

This is also a common strategy for people whose last years might be spent in a nursing home. Because these places are so expensive, and because Medicare won’t pay for it while they have the means to pay for it on their own, many parents and adult kids go on a campaign to give away all their money at least 5 years before they anticipate a nursing home would be needed. (Medicare has caught on to this and has changed the rules so that they will attempt to recover “gifts” made within 5 years of a nursing home application.)

53

I don’t think the concept of help is a “rich parent” or even “middle-class parent” thing. Of course, rich parents are going to be able to help in different ways/amounts than middle-class parents who can help in different ways/amounts than working-class parents, etc,

Did our parents help us buy a house? My mother-in-law did, but my parents didn’t. How could they when they had never been able to buy a house themselves*? My mother did,however care for all of her grandchildren while their parents worked. Not for free ( because they couldn’t afford that) but way less expensive and less rigid than the other available providers. I’m really not sure which of those was more financially helpful - and it may well have been the childcare.

As for me, I intend to help my kids to the extent possible. I intend for it to be roughly equal ( i don’t expect to give one $10 K for a wedding and another 10K for a downpayment while the other gets nothing because he doesn’t get married and rents) but also expect to be flexible- maybe the unmarried renter will get the money to buy the car of his dreams or open a business.
And about the older siblings getting less- I was the older sibling and I was old enough to understand that my parents just couldn’t afford to give me what they gave my youngest sister when we were kids. There were only two things that annoyed me. The first was my mother’s denial of any difference - according to her, my high school senior class didn’t have a trip to Disney. Only my younger sisters did. Second was that there was no effort to even things out over time but my mother pretended we were all given the same. Everything I got my younger sister got - plus she got the extras due to the improved financial situation. It’s like my sister got the music lessons and camp when she was a kid, my parents paid for my kids to have them, also paid for her kids to have them - and them insisted they didn’t help her more than they helped me.

*eventually, they bought my grandfather’s house at half-price - they paid for the half my mother wasn’t going to inherit . But that wasn’t until a few years later.

54

I would’ve been shocked had my mom offered to help us pay for the house. That said, the reason we can afford a nicer one is because my grandparents paid for my college, so I was fortunate that I didn’t have student loans to deal with. My husband’s parents paid for his. I paid for my graduate education (my mom said I’d had “too much” education and it was time for me to find a man and make babies). So we had no debt by the time we were ready to buy a house and start a family.

What irritates me (and understandably irritates my sister more) is that my mom has shelled out a lot more for me than for my sister. I’m the baby of the family. My mom has always seen me as slightly less competent and more sickly than my sister. So she’s always been more generous with me, even though my husband and I have held steady jobs since college and my sister has spent years out of her life supporting both her and her husband. We’ve always been the steadier household. Yet she still gave more to me because I was the baby and probably because I was way nicer to her growing up than my sister was. But I wish she’d helped my sister when she needed it rather than helping me when I didn’t.

When my kids are older, I’d like to do what I can to make sure neither of them has student debt. I don’t see myself helping out with their living expenses once they’re capable of managing for themselves, but would not mind if they chose to live with us. I’d also like to help my sister with her student loans, but she won’t let me. She did consent to letting me and my husband put some money aside for her kids’ college when they’re older, but I’m sure that was a hard concession to make.

55

Way back when I bought a house my parents gave me $1500 to put down. That was 5% on the little two bedroom row house. I didn’t ask for it nor expect it so it was a nice surprise. I think they told me it was a loan but then later said I didn’t have to pay it back.

Several years later when my sister was buying a house they gave her $2000 figuring it was fair, adjusting for inflation. Not to my sister it wasn’t. She was buying an $80,000 house, individual house with 5 bedrooms, 2 car garage and swimming pool. She expected them to give her 5% ($4000).
My father shut her up by pointing out that they were under no obligation to give her anything.
My sister can pull that stuff on our mother, dad would tell her to go pound sand.

I think it is not unusual for parents to help their kids with their first house. Even way back when, 58 years ago when my parents bought their first house, my great-grandfather gave them $500. That was almost 10% of the price, a big chunk of money back then.

I think mine did what they could to keep it fair between us but never in a tit for tat way. I think that way, my sister never will, even though the reality is she did get more.

Mom’s getting old, close to 80 and now my sister is going through the house saying daddy promised her this and daddy promised her that. According to her, daddy promised her pretty much everything.
Works to my benefit though, it’s pissing off mommy.

56

The idea that helping your adult child live beyond their means by giving them cash is “good parenting” is preposterous. Our parents owe us exactly nothing once we are also adults–not “fair” distribution of their resources between their offspring, not paying for our college, not cooking our holiday meals, not babysitting our kids, and certainly not buying us houses.

There is nothing inherently wrong with a parent doing those things, but bringing a child into the world does not create a lifetime obligation to the adult it becomes. Propping an adult offspring’s misplaced sense of entitlement up is actually pretty shitty parenting and an adult shouldn’t be “parented” anyway.

57

I agree that your sister’s expectation is wrong. $2K may buy less for her relative to you, but from the perspective of your parent’s pocketbook, the gifts are equivalent.

58

This was my reaction as well. My parents did cover the majority of my education, and this did indirectly enable me to save up for my down payment, but I wouldn’t have even thought of the possibility of them helping with a house. My experience with my (middle class, covering most of the spread of people who call themselves that) peer group is pretty consistent with that as well: one friend who married into pretty serious money and has a house that I’d wager the in-laws gifted them; a few (including myself) who did the rent and save up, then starter condo to build equity, then move up from there; a couple who took advantage of military housing allowances and loan opportunities and are doing very well; and a bunch of people who are still renting in their early 30s. The divide somewhere in the middle of this ‘middle-class’ sample is those parents that could cover the entire education vs those who could only do part, with significant student loans as a result. Contribution to down payments is somewhere above what I’m familiar with.

(Housing contributions in lieu of college education would make more sense to me, but it sounds like we’re mostly talking about both.)

59

They do in my family. The youngest in my family is shored up by the great featherbed of parental welfare and rails against the “advantages” that I had (yeah, writing until 11 PM Christmas Eve was a blast at my first job) and claims that I look down on him because he works in construction (I don’t, and have told him so).

You should come to Thanksgiving one year!

60

I’ve got a brother with three kids and a sister with none, I have one. We’re not at all equal and our mum treats us like that. She did a reverse mortgage on her house to avoid tax and also to be able to enjoy seeing us use it before she pops her clogs. She gave us each (well as far as I know) £10,000. I bought a piece of land with mine in the Caribbean where I live and built a small home with my savings, my sister used hers to help with her mortgage in London. I don’t know what my brother did with his, but he’s got three kids so maybe he just put it up, I really don’t know - maybe he cleared some debts. I didn’t take the money my mum had given me for about 5 years, when she sent it she grumbled about not getting the interest she’d been earning on it any more!

I lost my job half way through the small loan I got to put the roof on my house and my sister, my mother and my daughter all chipped in on payments. My sister was according to my mum ‘loaded’ at the time. Now my sister’s been made redundant and is recovering from cancer I suspect my mum’s spent quite a bit with her in the last year or so. In fact she cancelled a huge holiday she’d planned to spend with my bro and his kids to be with my sis. Now bro’s out of work so I’m sure she’s assisting him where she can. It’s all swings and roundabouts.