My wife and I just returned from our honeymoon in New Zealand. It was amazing. We swam with wild dolphins. We went star gazing in the largest dark sky reserve in the world. We ate fresh seafood, drank more coffee than is healthy¹, and spent three weeks road-tripping across the country without a care in the world.

None of this was cheap. But we are enormously fortunate: most of the trip was paid for by wedding gifts from friends and family.

Gifts allow people to finance large expenses that they couldn’t fund out of their savings, or at least not entirely—like epic honeymoon adventures. Unsurprisingly, gifts also loom large in the biggest purchase we make in our lifetimes: our homes.

Gifts are most important for younger buyers who haven’t had the chance to build savings, and have less home equity to roll into a purchase—and are lucky enough to have loved ones willing to lend a hand.

Although savings are perennially the largest source of downpayment funds for all ages, in 2021-22 almost one in five homebuyers between the age of 24 and 32 used a gift from a friend or family member to help finance their downpayment.

This is a conservative estimate.

The 2023 NAR Generational Trends Report, from which this data was taken, showed a sharp drop in the use of gifts across all age groups compared to prior years. This may be a blip (typically, 50% more people report the use of gifts). A Redfin survey² from last year reported 38% of buyers under 30 using gifts or inheritance for a downpayment.

In any case, whether it’s closer to 20% or 40%, this much is clear: gifts feature prominently in the source of financing for young homeowners.

How should we feel about this?

Those young buyers who benefitted from gifts are undoubtedly happy for the help. And if gifts are one way that the pool of potential homeowners expands, that’s surely a positive. Maybe—to paraphrase Gordon Gekko—gifts, for lack of a better word, are good³.

But from a societal perspective, it’s not so clear that a large share of gifts in downpayment financing is an unalloyed positive.

To the extent that the young people who receive gifts likely already have familial wealth, a high share of gift-finance home purchases probably exacerbates already-high wealth inequality, and drives up home prices for those without family support.

What do you think?