Markus Andrews

Nearly three-quarters of aspiring homebuyers say affordability is the No. 1 obstacle to owning a home.
In today’s market, “nepo-homebuyers” are tapping family money to afford their down payment.
However, there are other options for would-be buyers who are struggling to come up with a 20% down payment.

A “For Sale” sign in Arlington, Virginia, on Aug. 22, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images

Fewer people can afford to buy a house these days.
On top of soaring home prices, 30-year fixed mortgage rates have been hovering near the highest level in more than two decades.

“U.S. home prices are near record highs, and mortgage rates have rocketed to their loftiest levels since 2000,” said Bankrate analyst Jeff Ostrowski. “For today’s would-be homebuyers, times are decidedly tough. They face limited choices and an affordability squeeze.” 
For some buyers, that leaves just one option: asking their parents for help.

Buyers turn to the bank of mom and dad

“First-time buyers cobble together down payment sources from at least two places,” Zillow’s chief economist Skylar Olsen recently said on CNBC’s “Last Call.”
“Some of that is hard-won savings,” she said. “The other part is, say, a gift from family and friends.”
In fact, roughly 40% tap the bank of mom and dad, up from only one-third pre-pandemic, Zillow found. “That’s a pretty privileged network,” Olsen added. 

More from Personal Finance:Homeowners say roughly 5% is the magic number to moveMore unmarried couples are buying homes togetherSome costly financial surprises for first-time homebuyers
Would-be homebuyers need a salary of $114,627 to afford a median-priced house in the U.S., according to another report by real estate site Redfin, a particularly high bar for those just starting out.
To bridge the gap, a growing share of younger house hunters are now considered “nepo-homebuyers,” because they rely on family money to complete their purchase, the Redfin report said.
Nearly 40% of recent homebuyers under age 30 used either a cash gift from a family member or an inheritance to afford their down payment, Redfin also found.

Home affordability is a growing problem

Despite being the hallmark of the American Dream, close to three-fourths of would-be homeowners said affordability is their greatest obstacle, a recent report by Bankrate found.
In fact, housing is far less affordable today than in any time in recent history, several studies show.

Over the past 35 years, the payment-to-income ratio — a commonly used measure of the share of median income it takes to make the monthly principal and interest payment on the median home with a 30-year mortgage and 20% down — has averaged less than 25%, according to data from ICE Mortgage Technology.
At its peak in 2006 before the crash, the payment-to-income ratio was 34%. In late 2023, the payment-to-income ratio is 40%.

‘A down payment isn’t everything’

Often, it’s the down payment that seems particularly daunting.
However, there are options, noted LendingTree’s senior economist Jacob Channel. “Though they are important, buyers should remember that a down payment isn’t everything, and, even if you don’t have tens of thousands of dollars you can put toward one, that doesn’t mean that you won’t be able to buy a house.”
While a 20% down payment is still considered the standard, the federal government, states, banks and credit unions all offer programs with much lower down payment requirements, or even none at all.
“Keep in mind that many lenders and specific loan options, like FHA mortgages, don’t necessarily require particularly large down payments,” Channel said.
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The looming 2024 election has prompted fears that market volatility may hurt retirement savings.
Meanwhile, candidates are debating changes to Social Security, the bedrock of retirees’ incomes.
Here’s what experts say to do if you’re worried about your retirement nest egg.

Peopleimages | Istock | Getty Images

For many Americans, planning for retirement may feel like a daunting financial goal.
Now, there’s another risk on the horizon that may stoke their worries — the 2024 elections.

Almost half of investors — 45% — surveyed by Nationwide Retirement Institute believe next year’s presidential and congressional contests will have a greater impact on their retirement plans and portfolios than market performance.
More than two-thirds — 68% — of Republican investors believe the election outcome will have a direct and lasting impact on the stock market, versus more than half — 57% — of Democratic investors.
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The online survey, which was conducted in August, included 2,404 investors ages 18 and up, as well as 507 financial advisors and other professionals.
The results also showed respondents believe the stakes are high for the economy, with nearly 1 in 3 respondents — 32% — believing the economy will fall into a recession if the party they do not support wins.

Older investors are most fearful because of the lasting impact a recession may have on their retirement. Pre-retirees ages 55 to 65 are more concerned about an economic downturn and inflation, the results found. And, one-third, or 33%, of that cohort are managing their investments more conservatively ahead of the 2024 election, compared to 31% of non-retirees.  

“As elections approach, people tend to overestimate the impact of elections on what they think the equity markets are going to do,” said Eric Henderson, president of Nationwide Annuity.
“As we think about saving and preparing for retirement, that’s obviously a much longer-term outlook,” Henderson said. “Historically, presidents don’t have a significant impact for the long term on equity markets.”

Social Security on the ballot in 2024

While it remains to be seen just how much the election will affect markets, the 2024 election is poised to have an impact on Social Security, which replaces about 40% of Americans’ pre-retirement income on average.
The trust funds on which Social Security relies to help pay benefits are projected to run out in 2034, at which point 80% of benefits will be payable.
Leaders elected next year will likely have a say on any adjustments made ahead of that depletion date.

The news cycle, in particular, is noise and that heightens anxiety.

Preston Cherry
president of Concurrent Financial Planning

Former President Donald Trump, who is in the lead in Republican polls, has vowed to leave entitlements like Social Security and Medicare untouched.
Florida Governor Ron DeSantis, who is second in GOP primary polling, said during this week’s Republican debate that his message to seniors who currently collect benefits is, “Promise made, promise kept.”
However, it is possible future beneficiaries may see changes.
Republican candidates were divided on whether to raise the retirement age. Meanwhile, former New Jersey Governor Chris Christie suggested the wealthy should not take benefits they do not need.
What moves experts recommend
Financial advisors also believe the election may have consequences for the markets, Nationwide’s survey found. While 46% of those polled said they see inflation as the biggest challenge to retirement portfolios, 38% said they expect the stock market to be volatile for 12 months after the election if the party they do not side with wins.
More than half of advisors — 56% — said they think staying the course is best when it comes to investing in an election year. Yet almost all — 96% — are implementing strategies aimed at protecting clients from market risk.
The top strategies they are using includes buying annuities; diversifying and focusing on non-correlated assets; and using more liquid investments like mutual funds and ETFs.
“If someone has a good plan, the main thing is to stay the course,” Henderson said.

If you don’t know what you plan is, it is a good idea to meet with a financial advisor to come up with one, he said.
Research shows investment returns tend to average out, regardless of which party is in the White House, noted Preston Cherry, a certified financial planner and founder and president of Concurrent Financial Planning in Green Bay, Wisconsin. Cherry is also a member of the CNBC Advisor Council.
“The noise of elections … the news cycle in particular is noise and that heightens anxiety,” Cherry said. “I would suggest for people to not let noise have an overwhelming impact on their emotions and decisions and to be more informed on the information that matters to their own households.”
While some retirees may be tempted to claim Social Security benefits early due to the program’s future uncertainty, experts still say it’s still generally best to wait to claim, if possible. More

Workers may have jobs where they pay into Social Security or earn pension benefits.
When they have both, their Social Security benefits may be adjusted to reflect that.
There’s growing support in Congress to either revise those rules or eliminate them altogether.

Araya Doheny | Getty Images

When Dave Bernstein, 87, started working at the U.S. Postal Service in February 1970, he was making $2.35 an hour.
To supplement his income, he also took on other work. Years later, Bernstein decided in 1992 to take a voluntary retirement.

“We knew there was going to be a reduced pension because of the early out,” said Phyllis Bernstein, Dave’s wife, who is 84.
But what came next was something the couple did not expect.
While Dave was expecting a monthly Social Security check of around $800, it ended up being just about half that amount – around $415 – even though he had earned the required 40 credits to be fully insured by the program. The benefits were adjusted based on rules for workers who earn both pension and Social Security benefits.
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The couple, who reside in Tampa, Florida, have had a different retirement than they envisioned due to the lower income.

Phyllis kept working until she was 82. They have also turned to family for financial support.
Their lifestyle is frugal, with home-cooked meals and cars they kept for 20 years, or “until the wheels were falling off,” the couple jokes.
But their limited resources have made traveling to Australia and New Zealand – Phyllis’ dream – out of reach.
“When he retired, I was working,” Phyllis said. “We just couldn’t do the travel.”
Today, Dave is pushing for the Social Security rules that reduced his benefits to be changed.

His union, the American Postal Workers Union, has endorsed the Social Security Fairness Act, a bill proposed in Congress that would repeal Social Security rules known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO, that reduce benefits for workers had positions where they did not pay Social Security taxes, also called non-covered earnings.
The legislation has support from other organizations that represent public workers, including teachers, firefighters and police.
The bill has overwhelming bipartisan support in the House of Representatives – 300 co-sponsors – at a time when that chamber has been politically divided. That support recently prompted House lawmakers to send a letter to leaders of the Ways and Means Committee to request a hearing.
The Social Security Fairness Act has also been introduced in the Senate, with support from 49 leaders from both sides of the aisle.
Yet some experts say just getting rid of the rules may not be the most effective way of making the system fairer.

How the WEP, GPO rules work

The WEP applies to how retirement or disability benefits are calculated if a worker earned a retirement or disability pension from an employer who did not withhold Social Security taxes and qualifies for Social Security from work in other jobs where they did pay taxes into the program.
Social Security benefits are calculated using a worker’s average indexed monthly earnings, and then using a formula to calculate a worker’s basic benefit amount. For workers affected by the WEP, part of the replacement rate for the average indexed monthly earnings is brought down to 40% from 90%.
The GPO, meanwhile, reduces benefits for spouses and widows or widowers of recipients of retirement or disability pensions from local, state or federal governments.

It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants.

Edward Kelly
general president of the International Association of Fire Fighters

Under the GPO, Social Security benefits are reduced by two-thirds of the government pension. If two-thirds of the government pension is more than the Social Security benefit, the Social Security benefit may be zero.
The impact of the rules is far reaching, according to Edward Kelly, general president of the International Association of Fire Fighters. Many firefighters work in second jobs in the private sector as cab drivers, bar tenders or truck drivers, where they earn credits toward Social Security.
“They steal their money, because they’re also public employees,” said Kelly, who describes his union members as “passionately angry” about the issue.
“It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants, whether they are teachers, cops and, obviously, firefighters,” Kelly said.

Why experts say another fix may be better

The WEP and GPO rules were intended to make it so workers who pay Social Security taxes for their entire careers are treated the same as those who do not.
But under those current rules, some beneficiaries receive lower benefits than they would have if they paid into Social Security for all of their careers, while others receive higher benefits, according to the Bipartisan Policy Center.
Yet repealing the WEP and GPO rules would result in Social Security benefits that are “overly generous” for non-covered workers, research has found.
Part of what may create that advantage is that Social Security benefits are progressive, and therefore replace a larger share of income for lower earners. So someone who only has part of their salary history in Social Security may get a higher replacement rate without considering their pension income.

Fully repealing the WEP and GPO rules may also come with higher costs at a time when the program facing a funding shortfall. The change would add an estimated $150 billion to the program’s costs in the next 10 years, according to the Center on Budget and Policy Priorities.
Another way of handling the disparity may be to create a proportional approach to income replacement. Instead of the WEP, workers’ benefits would be calculated based on all of their earnings and then adjusted to reflect the share of their careers that were in jobs covered by Social Security. A similar approach may be taken with the GPO.
Certain bills on Capitol Hill propose a proportional approach.
However, a proportional formula may not solve all the inequities in the current system, according to Emerson Sprick, senior economic analyst at the Bipartisan Policy Center, which has prompted to think tank to work on refining its proposal.

‘Extremely complex’ to understand

An important advantage to reforming the current formulas would be making it easier for workers to understand and plan for their retirements.
“It is definitely extremely complex, and very hard for folks preparing for retirement or in retirement, to understand what it means for their benefits,” Sprick said.
Social Security statements that provide retirement benefit estimates do not take these rules into account.
Consequently, many workers find out their benefits are adjusted when they are about to retire.

shapecharge | E+ | Getty Images

“The young guys don’t pay attention to it because it’s too far out; they’re not worried about it,” Kelly said of the firefighters.
“It’s not until you’re ready to go out the door that you actually start paying attention to what you’re going to have to live off when you actually retire,” he added.
The reductions to their Social Security benefits can be a shock.
For beneficiaries like the Bernsteins who start out with lower benefits, it can be difficult to catch up, even after a record 8.7% Social Security cost-of-living adjustmentw went into effect this year.
“Gas this summer and in the spring at $4 a gallon ate that money up like it wasn’t even there,” Dave Bernstein said. More

A man check his phone near an Apple logo outside its store in Shanghai, China September 13, 2023. 
Aly Song | Reuters

Companies are feeling the ill effects of dampening consumer demand in a range of sectors, but select names are confident they can deliver solid growth even as the economy becomes more challenging.
Wall Street analysts can help investors identify stocks that have what it takes to thrive amid short-term headwinds — and that can offer attractive returns going forward.

Here are five stocks favored by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.

Apple

Tech giant Apple (AAPL) recently reported its fiscal fourth-quarter results. While the company’s earnings exceeded expectations, the top line reflected the impact of macro challenges on consumer spending. Apple’s overall revenue declined for the fourth consecutive quarter due to notable declines in iPad and Mac sales.
Baird analyst William Power lowered his revenue estimates and also cut his price target for AAPL stock to $186 from $204 to reflect the company’s flattish top line guidance for the December quarter. That said, Power raised his EPS estimate slightly to $2.08 from $2.04 due to higher margin guidance.    
Commenting on the guidance, Power noted that Apple’s Services business remains a key pillar. The analyst thinks that management’s commentary about the expectation of continued strength in the Services business in the holiday quarter and the projected rise in iPhone revenue addressed some concerns.
Power explained that his $186 target price target is 29 times his calendar year 2024 EPS forecast, putting AAPL’s valuation at the high end of its historical average and at a premium to other technology and consumer staples leaders, “reflecting strong execution, growing services contribution, continued eco-system benefits and strong free cash flow.”

Power ranks No. 194 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 55% of the time, with each delivering a return of 14.7%, on average. (See Apple Technical Analysis on TipRanks)

Amazon

E-commerce and cloud computing behemoth Amazon (AMZN) impressed investors with its solid third-quarter earnings, which surpassed Wall Street’s expectations.  
Goldman Sachs analyst Eric Sheridan noted that Amazon’s Q3 earnings beat was fueled by the momentum in its e-commerce business, expansion of the North America unit’s operating margin, and continued stabilization in Amazon Web Services’ (AWS) revenue growth.
The analyst added that the company’s restructuring initiatives, regionalization of its domestic fulfillment center network, and success at overcoming the cost headwinds seen in the past 24 months have helped deliver an inflection point in North American e-commerce margins.
Sheridan thinks that Amazon is well-positioned to outperform in the future, given that e-commerce margins continue to overcome headwinds that emerged in recent years and its advertising business continues to expand. Further, AWS can still gain from long-tailed structural opportunity created by the transitioning needs of enterprise customers, he said.  
“Looking over a multi-year timeframe, we reiterate our view that Amazon will compound a mix of solid revenue trajectory with expanding margins as they deliver yield/returns on multiple year investment cycles,” said Sheridan, reiterating a buy rating and raising the price target for AMZN stock to $190 from $175.
Sheridan holds the 288th position among more than 8,600 analysts on TipRanks. His ratings have been successful 57% of the time, with each rating delivering an average return of 10.1%. (See Amazon Options Activity on TipRanks).

Microsoft

Yet another tech giant on this week’s list is Microsoft (MSFT), which recently delivered upbeat fiscal first-quarter results and issued an encouraging second-quarter revenue outlook.
Deutsche Bank analyst Brad Zelnick noted that Microsoft’s revenue surpassed guidance, driven by strength across the board, with significant upside in the high-margin Windows offering.
The analyst highlighted that revenue from Azure, MSFT’s cloud computing platform, grew 28% year-over-year, thanks to higher GPU capacity and marginally better per-user services. He was also impressed with the improvement in the fiscal first quarter’s margins, thanks to the company’s operating discipline.  
Zelnick is quite optimistic about the Microsoft 365 Copilot artificial intelligence (AI) add-on. He pointed out that 40% of the Fortune 100 were said to be already using the product in pre-release with very strong feedback. While the company said it expects the related revenue from this new launch to increase “gradually over time,” he thinks that the outlook is likely conservative.
“We believe this is the most anticipated new product we have ever seen released in our long time covering the Software industry,” the analyst said about Microsoft 365 Copilot.
Zelnick raised his price target from $380 to $395 and reiterated a buy rating on MSFT stock. He ranks No. 48 among more than 8,600 analysts on TipRanks. His ratings have been successful 69% of the time, with each rating delivering an average return of 15.1%. (See Microsoft Hedge Fund Trading Activity on TipRanks).

ServiceNow

Zelnick is also bullish on ServiceNow (NOW), a cloud-based software company that helps enterprises automate and manage workflows. The company delivered market-beating third-quarter earnings and revenue, thanks to the impressive growth in subscription revenues and an aggressive push into generative artificial intelligence.
Following the Q3 2023 print, Zelnick maintained a buy rating on NOW stock and increased the price target to $650 from $625. In particular, the analyst highlighted the 24% year-over-year growth in the current remaining performance obligations — that is, contract revenue that will be recognized as revenue in the next 12 months — that was fueled by the performance of the U.S. federal vertical. This vertical saw net new annual contract value increase by more than 75% and strong early renewals in the quarter.
“Management commentary suggests the Federal opportunity is both robust and durable as agencies look to standardize on a single platform that offers end-to-end solutions,” said Zelnick.
The analyst also observed the early demand for ServiceNow’s generative AI offering Now Assist and broader generative AI capabilities, with the company mentioning that it has a pipeline of 300 customers and signed four large deals at the quarter-end.
Overall, Zelnick thinks that ServiceNow is ideally positioned to help customers adapt to a digital-first world and leverage generative AI across multiple enterprise workflows. (See ServiceNow Insider Trading Activity on TipRanks)      

CyberArk Software

The last stock for this week is identity security company CyberArk Software (CYBR). Earlier this month, the company reported solid third-quarter results. The company raised its full-year guidance for annual recurring revenue, or ARR, following 38% year-over-year growth in Q3 2023 ARR to $705 million.
After the results, Mizuho analyst Gregg Moskowitz, who ranks 151st out of more than 8,600 analysts on TipRanks, increased the price target for CYBR stock to $195 from $175 and reaffirmed a buy rating. The analyst raised his full-year revenue and earnings estimates to reflect the company’s upgraded guidance.
The analyst acknowledged the company’s improved execution and a healthy increase in seven-figure annual contract value transactions in the third quarter. He highlighted management’s commentary about customers increasingly buying more than two products and the dramatic rise in the average deal sizes for new logos.
“We continue to view CYBR as a primary beneficiary of a heightened threat landscape that has amplified the need for privileged access, and identity and secrets management,” said Moskowitz.
Moskowitz’s ratings have been profitable 57% of the time, with each delivering an average return of 13.8%. (See CyberArk Financial Statements on TipRanks)        More

Defense stocks have largely outperformed in the wake of Hamas’ attack on Israel and the ensuing war, upholding the market axiom that these names tend to see better returns during times of conflict.
But some retail investors are staying away from the stocks, citing moral qualms about investing in a thesis tied to a deadly war.

An F-15E fighter aircraft can carry seven groups of four StormBreaker bombs.
Source: Raytheon

As the war between Israel and the Hamas militant group ramped up last month, Kenneth Suna took to his investing-focused TikTok account.
Suna began a video asking his more than 200,000 followers “if you’re cool with profiting off war,” before adding “I am not.” He went on to list the names and performances of defense-focused funds including the iShares U.S. Aerospace & Defense ETF (ITA) and the SPDR S&P Aerospace & Defense ETF (XAR).

“You have a choice where your money goes,” the 38-year-old Washington, D.C., resident told CNBC. “I would feel guilty.”
Suna is part of a group of everyday investors skirting the “returns at any costs” mentality on moral grounds. As the latest geopolitical conflict escalates, these investors are ignoring defense stocks despite the market axiom that those holdings tend to perform better in times of war.
Indeed, the iShares U.S. Aerospace & Defense ETF popped more than 4% in the week following Hamas’ Oct. 7 attack and went on to finish October up about 3.7%. Meanwhile, the benchmark S&P 500 index added just 0.5% that week and ended the month 2.2% lower.

Ignoring market wisdom

Retail traders poured into defense stocks and funds in the aftermath of the invasion, but inflows have since cooled, according to Vanda Research. Defense giant RTX, which Vanda found was a top sector pick among individual investors, has climbed 14% since the start of October.
But not everyone sees the intensifying conflict as a moment to invest in defense stocks. Weapon Free Funds, a screening tool gauging defense exposure in portfolios, including the funds in your 401(k), recorded a five-fold increase in visits between the attack and early November from the 30 days prior. 

Weapon Free Funds is part of a family of tools from shareholder advocacy nonprofit As You Sow aimed at helping people check if their fund dollars are invested in companies tied to themes such as guns or deforestation. Andrew Behar, As You Sow’s CEO, said it can be particularly challenging for those with money in large funds to decipher which companies they are investing in.
“The person who earns the money should have the right to decide how it’s invested and should be able to invest in alignment with their values,” Behar said. “We find there’s a really strong correlation of people who want that, but they don’t know how to do it.”
The screening platform gives funds a letter grade. An “A” means no holdings were flagged in a military weapons screen, while an “F” indicates more than 4% were. (For reference, the SPDR S&P 500 ETF Trust (SPY), which tracks the broad S&P 500 index, earned a “D'” grade.)

155mm artillery shells are inspected in the production shop at the Scranton Army Ammunition Plant on April 12, 2023 in Scranton, Pennsylvania.
Hannah Beier | Getty Images

Critics of defense companies have pointed to the fact that the need for their products can increase during periods of heightened geopolitical strife. The latest war’s impact on these businesses has already started becoming apparent: General Dynamics CFO Jason Aiken told analysts last month that artillery demand would likely see “upward pressure” as the Israel-Hamas conflict broke out alongside the ongoing war between Russia and Ukraine.
Those with moral qualms have also historically highlighted the death toll of war as a reason for their uneasiness.
Weapon Free Funds’ recent surge in interest surpassed what was seen in February and March of 2022 following Russia’s invasion of Ukraine, As You Sow said.
That can be tied to differences in public consensus of how these conflicts should play out. While there was overwhelming international support for Ukraine to fight back with weapons, opinion appears to be more mixed on the Israel-Hamas war as calls for a ceasefire grow.

Drawing the line

These moral calculations are the latest example of a growing trend of some investors wanting their holdings to reflect personal values. In one of the newest data points on the relationship, U.S. Bank found more than four-fifths of Gen Z and millennials would underperform the S&P 500′s 10-year return to ensure the companies they invested in had aligned with their beliefs.
“A common decision making process is that if I hold a value that I’m anti-war, then I don’t want to be holding stocks that enable war,” said Brad Barber, a finance professor focused on investor psychology at the University of California, Davis. “That is a fairly simple way of trying to invest in a way that’s consistent with one’s values.”
Meanwhile, Suna said he can feel caught between two schools of thought. There are those who tell him that war is going to happen anyway, so he might as well see the return on defense stocks. On the other side of the spectrum, he’s heard younger people say that they don’t invest because no corporation is perfect or because they see the stock market as an unequitable system for building wealth.
Suna is left walking a fine line: He views investing as creating a chance at retirement one day, but simultaneously needs to feel morally sound about where his money goes. Still, while he said choices about where to invest can sometimes be tricky or complex, deciding to avoid defense stocks wasn’t a particularly difficult call.
“More and more young people are saying, ‘You know what? You can invest how you want, but I’m not OK with that,'” Suna said. “Everyone draws the line somewhere.” More