Cash Wedding Gifts Gain Popularity as First-Time Homebuyers Struggle in Housing Market

As housing prices continue to soar and mortgage rates reach unprecedented heights, first-time homebuyers are finding themselves squeezed out of the market. This dire situation is now impacting couples preparing to tie the knot, prompting a shift in wedding gift preferences towards cash contributions for homeownership.

A study conducted by Censuswide in collaboration with Realtor.com, released on Wednesday, highlights this evolving trend. The research involved 2,291 respondents in the United States, including 755 individuals who have created a wedding registry within the last 24 months.

Realtor.com’s executive news editor, Clare Trapasso, emphasized the challenges faced by first-time homebuyers in the current market. She explained that any additional financial assistance these buyers receive can be the deciding factor between homeownership and continued renting.

Trapasso cited several factors contributing to the difficulties faced by first-time buyers. The high prices of homes persist, while mortgage rates have surged to nearly 7%. The limited availability of homes for sale has resulted in bidding wars and offers surpassing the asking price, particularly for highly desirable properties. Moreover, first-time buyers grapple with saving for a down payment, as inflation rises, rents increase, and student loan payments resume. Additionally, these buyers lack the advantage of selling a previous home for profit, unlike repeat buyers who utilize their accumulated home equity to make substantial down payments.

According to Trapasso, first-time homebuyers typically put down 6% of the purchase price as a down payment, compared to repeat buyers who typically contribute 17%. The National Association of Realtors provided this data.

The study revealed that newlyweds prefer financial gifts toward the purchase of a home over traditional presents like fine china or silverware. However, it also indicated that many couples feel obliged to register for traditional gifts they have no interest in receiving.

Of the newlyweds surveyed who had a wedding registry in the last 24 months, 85% expressed a preference for monetary contributions towards a down payment on a home rather than physical gifts. Furthermore, 80% indicated that if they were creating a gift registry today, they would include an option for guests to provide money for homebuying expenses such as down payments, mortgage payments, or closing costs.

Trapasso noted that financial assistance from wedding guests to make homeownership a reality is a growing trend. Many first-time homebuyers aspire to own a home and build wealth, even if they cannot afford to compete in the current tight housing market. They are foregoing traditional items on their wedding registries and instead requesting the financial means to become homeowners.

Couples have adopted various approaches to communicate their gift preferences. Some couples directly ask for cash contributions that can be used for purchasing a home, either through verbal requests, invitations, or wedding websites. Additionally, certain registries and mortgage lenders offer the option to create cash or homebuying funds, allowing guests to donate money instead of traditional gifts.

As the housing market continues to present challenges for first-time homebuyers, the desire for financial support to achieve homeownership is gaining momentum. The shift in wedding gift preferences reflects the aspirations of young couples who yearn for a place they can call their own and the opportunity to establish a foundation for future financial growth.