Is the transfer of wealth to the next generation fueling the real estate market?

The San Francisco Chronicle reports:

The market may be softening like an overripe peach, but in the wake of rising interest rates and exorbitant prices, the fact that there are still new buyers out there at all is nothing short of astounding.

Even in my own narrow circle of struggling young families, I've known a half dozen to finally bite the bullet in the past six months and buy their first Bay Area home. These are not doctors, lawyers and chief technology officers but ordinary folk whose incomes as filmmakers, carpenters and herbal therapists don't cover much more than day care and burritos. The affordability index is still at an all-time low: According to the California Association of Realtors, only 14 percent of families in California can afford a median-priced home.

So if people are still buying, where is the money coming from?

There are two primary answers to this question. Both say something about how much we as a nation are banking our future on the promise of financial security in homeownership. Both say something about the risks many of us are taking to become part of that "ownership society."

The first answer is good ol' Ma and Pa, or as one Money Magazine article put it, "The National Bank of Mom and Dad." According to the National Association of Realtors, last year 37 percent of first-time homebuyers reported that they had paid for their down payments in part or in whole with a gift, loan or inheritance from a family member or friend. (In 1991 only 18 percent of first-time buyers reportedly received monetary gifts from family or friends for down payments.)

No wonder California has a declining school age population.Anyway,a real estate market that's held up by inherited wealth is one that doesn't have much of a middle class.Not everyone is going to inherit money.