The bank of mom and dad: How parental co-buying is affecting NYC real estate
Photo © Jose Luis Stephens / Adobe Stock
It’s not uncommon for today’s younger generations to rely more heavily on their parents for financial support than in the past. Perhaps they move back home after college to save, or they need a guarantor to rent their first apartment. Some are even fortunate enough to get help with the down payment on their first home through parental co-buying, a trend that realtors are seeing in New York City more and more.
“Over the past two years, an average of 60 percent of my sales have involved parents buying for their children, and it represents a significant portion of our all-cash deals,” shares Frances Katzen, founder of The Katzen Team at Douglas Elliman.
In other cases, parents are buying investment properties that they’ll be able to pass down.
“I am being inundated with calls from parents asking about the real estate market in NYC, fretting about rental options, and considering buying a family apartment for children to live in/a family pied-a-terre,” says Coldwell Banker Warburg real estate agent Parisa Afkhami.
In fact, all of the realtors we spoke with agree that parental co-buying has caused a major shift.
“The city’s high entry costs and competitive market mean that first-time buyers often need extra support,” explains Kirsten Jordan, licensed associate real estate broker at Corcoran. “This reflects a broader trend where family resources are becoming a key factor in enabling young buyers to access desirable neighborhoods and quality buildings.”
Ahead, learn more about the trend, its financial implications, and what it means for buyers without these additional resources.
Parental co-buying is driving up competition in an already pinched market.
Whether you’re looking in New York City or a small suburb in New Jersey, the barriers to entry for first-time homebuyers have never been tougher.
According to the National Association of Realtors’ 2024 Profile of Home Buyers and Sellers report, the median age of a first-time homebuyer in the U.S. is 38, an all-time high and a three-year jump from 2023.
Moreover, just 24 percent of all national buyers were first-time homebuyers, whereas prior to 2008, the share was around 40 percent.
“The first-time homebuyer who can enter into today’s market is older, has a higher income [and] is wealthier,” Jessica Lautz, deputy chief economist at NAR, told CNBC, referencing high rent prices (and a subsequent inability to save) and a nationwide housing shortage as two reasons why.
And in New York City, there are additional hurdles to overcome.
Jordan shares with 6sqft that parental co-buying has driven up competition, and, in turn, pricing, in popular neighborhoods and new developments: “Buyers with family backing can make stronger offers or pay all-cash, which sometimes edges out those without similar support.”
Samantha Kirsch, licensed real estate salesperson with the Duck Kirsch Team at Corcoran, says parental co-buying is “injecting fresh liquidity into the market, particularly within the entry-level and mid-tier segments.”
“One-bedrooms, compact two-beds, and other ‘starter’ apartments are seeing heightened competition,” Kirsch continues. “Beyond helping deals close, this trend is driving up prices in segments where traditional first-time buyers struggle to compete without similar support. With family capital behind them, these buyers can act quickly, waive contingencies, and present bulletproof financials, which can give them a significant edge.”
Competition in New York City is being further heightened by international parent buyers, especially those with college-age children, notes Compass agent Pamela D’Arc.
“We’re seeing overseas parents purchasing apartments for their children to use during school breaks or holidays—sometimes simply to avoid long trips home,” she explains. “These units often serve as secondary residences or pied-à-terres for the family as well, reflecting how parental support is also influencing the luxury and new development segment of the market.”
Jordan says she’s seen an increase in European parents purchasing apartments for their children.
“The combination of a weaker dollar and steep discounts on new development condos is creating a rare window of opportunity,” she points out. “While the metrics for this trend will likely be lagging, we anticipate further growth in this kind of demand toward the end of the year, especially as market volatility eases and there’s more clarity and comfort around U.S. political leadership.”
What’s the difference between gifting and lending money?
When it comes to the financial implications of parental co-buying, there’s an important distinction in how a family gives home-buying assistance.
“The difference between gifting and lending money comes down to intent, and it matters more than people realize,” explains Reynolds Duck, licensed real estate salesperson with the Duck Kirsch Team at Corcoran. “A gift means giving funds with no expectation of repayment, while a loan involves clear terms and a plan to pay it back.”
Jordan adds that lending money “involves a formal loan agreement, sometimes with interest, and must comply with IRS rules.”
“Institutional lenders and co-op boards look closely at this distinction,” Duck continues. “Gifts can give buyers a boost for board qualification, improving their post-closing liquidity and keeping debt-to-income ratios low. On the other hand, loans count as debt, which can make financing trickier unless everything is properly documented.”
How does parental co-buying work with co-op boards?
Speaking of condo boards, this is where things get trickier.
“With condos, buyers get a deed and can divide ownership as they choose,” notes Kirsch.
“Co-ops are different in that you’re buying shares in a corporation, tied to a proprietary lease, and those shares need to be divided between co-owners and approved by the board.”
D’Arc has found that co-op boards prefer that any parental financial assistance comes in the form of a gift, as it’s seen as “less risky.” She’s also experienced many co-op buildings that “don’t permit non-occupant co-owners on the stock certificate.”
“Each [co-op] has its own preferred structures when it comes to parents buying for children, co-purchasing, or acting as guarantors,” explains Katzen. “In these cases, if the child doesn’t meet the post-closing requirements—such as liquidity, debt-to-income ratio, or earning capacity—the parent would typically be required to cover the monthly maintenance and mortgage in the event of a default.”
How does parental co-buying affect mortgages?
In addition to helping with cash upfront for a down payment, parental assistance can also make a major difference in mortgage terms.
“Because parents typically have stronger credit histories and income, they can help secure more favorable loan terms, which may result in lower monthly payments,” explains Katzen.
Even if a parent is just a co-borrower on the loan, their financials can improve the terms. However, “a co-signer doesn’t have ownership rights and is only responsible for payments if the primary borrower defaults,” Kirsch points out.
“When it comes time to resell, parental involvement can impact how proceeds are divided and may have tax implications depending on residency and title arrangements,” Kirsch adds.“If there’s no formal agreement, a parent might want to hold while the child wants to sell.”
“Suddenly you’re not just dealing with a listing—you’re mediating a family standoff,” she continues. “The resale process runs much smoother when ownership percentages, sale triggers, and profit splits are spelled out from day one.”
To that point, Katzen concludes that “parental co-buying offers financial advantages and added flexibility, but it requires thoughtful planning and a clear understanding of each party’s obligations.”
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A trend worth discussing but it highlights how incomes are not supporting the American dream of owning a home.