Wells: Planning for housing security in the era of affordability challenges

As we enter a new year, the housing affordability landscape continues to evolve. These changes pose challenges that demand fresh perspectives from all stakeholders — especially parents.

At our annual real estate forecast last year, I spoke about the role housing plays in providing long-term financial stability for young people. In the face of rising home prices, significant down payment requirements, and increasing mortgage payments, the question becomes: How can parents give their kids a chance to secure a stable financial future through housing?

The wealth gap: homeowners versus renters

The gap in wealth between homeowners and renters has reached historic highs. According to the 2023 Federal Reserve Survey of Consumer Finances, which is published every three years, the median net worth for homeowners is $396,200. By comparison, median net worth for renters is $10,400, or nearly a 40-to-1 difference. This disparity highlights the profound impact of homeownership on financial stability.

For young adults aspiring to buy a home, financial barriers are higher than ever. Nationally, home prices are up 41% since 2019, while rents are up 16% during the same period. In Northern Colorado, the average home price has followed a similar trajectory. In Fort Collins, for instance, the median home price in November 2024 was $559,900. At this price, a 20% down payment on a home is $111,980 – a daunting figure for most first-time buyers. This gap demonstrates why the median age for first-time homebuyers is now 38, an all-time historic high. These statistics illustrate why more young adults are trapped in a cycle of renting, with little hope of breaking into the housing market. 

Parental support: a new form of legacy planning

Traditionally, parents have prioritized saving for their children’s higher education, but the concept of planning for housing security has rarely been a focus. With the financial pressures facing young adults today, it’s time for this to change.

While parents aren’t expected to buy homes outright for their children, they can play a pivotal role in bridging the gap. Whether it’s helping with a down payment, contributing to closing costs, or guiding them toward financial literacy, parents can help children avoid the long-term wealth penalties of being stuck as renters.

Opportunities to act

Here are a few steps parents can take to prepare their children for housing security:

Establish a Housing Fund: Just as many parents set money for college with 529 savings plans, they should create a dedicated housing fund. Even modest contributions over time can grow into meaningful financial assistance.

Co-signing or shared ownership: Consider co-signing a mortgage or co-investing in a property with your children. This approach not only reduces barriers to entry but allows parents and children to build equity together.

Early financial literacy: Educate your kids about credit scores, saving strategies, and mortgage basics. This can empower them to make informed financial decisions when the time comes to buy a home.

Multi-generational living: In some cases, explore multi-generational housing arrangements. This can provide immediate stability and shared financial benefits, especially in high-cost housing markets.

Consider creative strategies: From “kiddie condos” (properties purchased by parents for children to live in during college) to exploring rent-to-own options, there are innovative ways to support young buyers.

Housing affordability and the future

Homeownership remains one of the most reliable ways to build generational wealth. But without access to the housing market, young people can be left behind, unable to close the ever-widening wealth gap.

The increasing disparity between homeowners and renters reflects systemic challenges, but it also highlights the importance of proactive planning. Parents who think strategically about housing security today can help their children overcome these barriers tomorrow.

Give your kids a chance

Helping children achieve housing security is about creating options. It’s about giving them a chance to build equity, accumulate wealth, and secure a stable financial future. The challenges of affordability won’t disappear overnight, but parents have the unique ability to prepare their children to navigate these hurdles.

By planning for housing security alongside other long-term financial goals, parents can help ensure their children are better positioned to thrive. The legacy we leave isn’t just financial, it’s foundational. It’s the opportunity to grow, to build, and to secure stability that every child deserves. After all, it’s not just about giving your kids a home, it’s about giving them a chance to live the life of their dreams. 

Brandon Wells is president of The Group Inc. He can be reached at bwells@thegroupinc.com or 970-430-6463.

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