And how they can cut the time by almost 3 years
Renters hoping to buy a home can expect to be saving for a down payment for 8 years on average; although it can take more than 4 times longer!
An analysis by HotPads calculates that as the time a renter would take to save $45,000 as a 20% down payment on the US median priced home ($223,300). It assumes they save 16.5% of their income after accounting for the cost of renting (the typical savings rate for renters in the US according to the 2017 Bureau of Labor Statistics Consumer Expenditure Survey.)
However, renters could save their down payment almost three years faster if they were able to live rent free – for example with mom and dad – if they used the typical 34% renters use for housing costs, as additional savings.
"Coming up with a down payment is often the biggest hurdle for first-time home buyers. The challenge has become all the more difficult because of rising rents and home values, which make savings harder and the necessary down payment bigger," said Joshua Clark, economist at HotPads. "While living independently may be appealing, for many it's not worth the prospect of pushing home ownership further into the future. Living rent-free with family is an increasingly common way young adults can accumulate the pot of savings necessary to purchase their first home."
42 years to buy a home
Of course, in the hottest markets, those earning the median income would take significantly longer to save a 20% down payment for a typical home.
In San Jose it would take renters more than 42 years to save – meaning they would be preparing to retire before becoming homebuyers – but they could cut that to just above 18 years if they were able to eliminate the cost of renting.
|
|
20% Down Paymentvi |
||||||||
|
Metro Area |
Median |
Median |
Median |
10% |
Time |
Time Spent |
20% |
Time |
Time |
|
United States |
$1,525 |
$225,300 |
$52,449 |
$22,530 |
4 yr. 0 mo. |
2 yr. 7 mo. |
$45,060 |
8 yr. 0 mo. |
5 yr. 2 mo. |
|
New York, NY |
$2,375 |
$438,300 |
$65,142 |
$43,830 |
7 yr. 3 mo. |
4 yr. 1 mo. |
$87,660 |
14 yr. 6 mo. |
8 yr. 2 mo. |
|
Los Angeles- |
$2,940 |
$652,300 |
$58,055 |
$65,230 |
17 yr. 4 mo. |
6 yr. 10 mo. |
$130,460 |
34 yr. 9 mo. |
13 yr. 7 mo. |
|
Chicago, IL |
$1,785 |
$224,800 |
$56,117 |
$22,480 |
3 yr. 11 mo. |
2 yr. 5 mo. |
$44,960 |
7 yr. 10 mo. |
4 yr. 10 mo. |
|
Dallas-Fort |
$1,675 |
$242,600 |
$53,102 |
$24,260 |
4 yr. 5 mo. |
2 yr. 9 mo. |
$48,520 |
8 yr. 11 mo. |
5 yr. 6 mo. |
|
Philadelphia, |
$1,680 |
$232,700 |
$56,926 |
$23,270 |
3 yr. 10 mo. |
2 yr. 6 mo. |
$46,540 |
7 yr. 8 mo. |
4 yr. 11 mo. |
|
Houston, TX |
$1,585 |
$205,500 |
$55,765 |
$20,550 |
3 yr. 5 mo. |
2 yr. 3 mo. |
$41,100 |
6 yr. 9 mo. |
4 yr. 6 mo. |
|
Washington, |
$2,180 |
$406,200 |
$71,711 |
$40,620 |
5 yr. 5 mo. |
3 yr. 5 mo. |
$81,240 |
10 yr. 10 mo. |
6 yr. 10 mo. |
|
Miami-Fort |
$2,035 |
$283,800 |
$48,554 |
$28,380 |
7 yr. 2 mo. |
3 yr. 7 mo. |
$56,760 |
14 yr. 3 mo. |
7 yr. 1 mo. |
|
Atlanta, GA |
$1,480 |
$217,500 |
$53,247 |
$21,750 |
3 yr. 9 mo. |
2 yr. 6 mo. |
$43,500 |
7 yr. 5 mo. |
4 yr. 11 mo. |
|
Boston, MA |
$2,415 |
$467,000 |
$67,784 |
$46,700 |
7 yr. 4 mo. |
4 yr. 2 mo. |
$93,400 |
14 yr. 7 mo. |
8 yr. 4 mo. |
|
San |
$3,510 |
$957,400 |
$72,219 |
$95,740 |
19 yr. 3 mo. |
8 yr. 0 mo. |
$191,480 |
38 yr. 7 mo. |
16 yr. 1 mo. |
|
Detroit, MI |
$1,305 |
$160,000 |
$53,983 |
$16,000 |
2 yr. 6 mo. |
1 yr. 10 mo. |
$32,000 |
5 yr. 1 mo. |
3 yr. 8 mo. |
|
Riverside, CA |
$1,975 |
$367,100 |
$49,061 |
$36,710 |
8 yr. 9 mo. |
4 yr. 6 mo. |
$73,420 |
17 yr. 7 mo. |
9 yr. 1 mo. |
|
Seattle, WA |
$2,240 |
$489,700 |
$65,401 |
$48,970 |
7 yr. 8 mo. |
4 yr. 6 mo. |
$97,940 |
15 yr. 5 mo. |
9 yr. 1 mo. |
|
Minneapolis- |
$1,690 |
$268,100 |
$58,055 |
$26,810 |
4 yr. 4 mo. |
2 yr. 10 mo. |
$53,620 |
8 yr. 7 mo. |
5 yr. 7 mo. |
|
San Diego, CA |
$2,730 |
$591,400 |
$58,449 |
$59,140 |
13 yr. 11 mo. |
6 yr. 2 mo. |
$118,280 |
27 yr. 11 mo. |
12 yr. 3 mo. |
|
St. Louis, MO |
$1,200 |
$167,000 |
$50,957 |
$16,700 |
2 yr. 9 mo. |
2 yr. 0 mo. |
$33,400 |
5 yr. 6 mo. |
4 yr. 0 mo. |
|
Tampa, FL |
$1,485 |
$213,600 |
$47,745 |
$21,360 |
4 yr. 4 mo. |
2 yr. 9 mo. |
$42,720 |
8 yr. 8 mo. |
5 yr. 5 mo. |
|
Baltimore, |
$1,750 |
$267,900 |
$58,438 |
$26,790 |
4 yr. 4 mo. |
2 yr. 9 mo. |
$53,580 |
8 yr. 8 mo. |
5 yr. 7 mo. |
|
Denver, CO |
$2,120 |
$405,300 |
$59,474 |
$40,530 |
7 yr. 3 mo. |
4 yr. 2 mo. |
$81,060 |
14 yr. 5 mo. |
8 yr. 3 mo. |
|
Pittsburgh, |
$1,110 |
$143,900 |
$50,336 |
$14,390 |
2 yr. 4 mo. |
1 yr. 9 mo. |
$28,780 |
4 yr. 9 mo. |
3 yr. 6 mo. |
|
Portland, OR |
$1,950 |
$397,300 |
$57,330 |
$39,730 |
7 yr. 1 mo. |
4 yr. 2 mo. |
$79,460 |
14 yr. 2 mo. |
8 yr. 5 mo. |
|
Charlotte, NC |
$1,395 |
$206,200 |
$51,962 |
$20,620 |
3 yr. 7 mo. |
2 yr. 5 mo. |
$41,240 |
7 yr. 1 mo. |
4 yr. 10 mo. |
|
Sacramento, |
$1,985 |
$408,700 |
$56,998 |
$40,870 |
7 yr. 6 mo. |
4 yr. 4 mo. |
$81,740 |
14 yr. 11 mo. |
8 yr. 8 mo. |
|
San Antonio, |
$1,390 |
$192,800 |
$47,870 |
$19,280 |
3 yr. 9 mo. |
2 yr. 5 mo. |
$38,560 |
7 yr. 6 mo. |
4 yr. 11 mo. |
|
Orlando, FL |
$1,535 |
$237,100 |
$46,015 |
$23,710 |
5 yr. 2 mo. |
3 yr. 1 mo. |
$47,420 |
10 yr. 5 mo. |
6 yr. 3 mo. |
|
Cincinnati, |
$1,250 |
$168,900 |
$50,657 |
$16,890 |
2 yr. 10 mo. |
2 yr. 0 mo. |
$33,780 |
5 yr. 1 mo. |
4 yr. 0 mo. |
|
Cleveland, |
$1,210 |
$145,600 |
$50,688 |
$14,560 |
2 yr. 5 mo. |
1 yr. 9 mo. |
$29,120 |
4 yr. 11 mo. |
3 yr. 6 mo. |
|
Kansas City, |
$1,260 |
$191,600 |
$51,247 |
$19,160 |
3 yr. 3 mo. |
2 yr. 3 mo. |
$38,320 |
6 yr. 5 mo. |
4 yr. 6 mo. |
|
Columbus, |
$1,440 |
$189,900 |
$51,828 |
$18,990 |
3 yr. 4 mo. |
2 yr. 3 mo. |
$37,980 |
6 yr. 8 mo. |
4 yr. 5 mo. |
|
Indianapolis, |
$1,240 |
$163,900 |
$49,766 |
$16,390 |
2 yr. 10 mo. |
2 yr. 0 mo. |
$32,780 |
5 yr. 8 mo. |
4 yr. 0 mo. |
|
San Jose, CA |
$3,710 |
$1,245,800 |
$79,969 |
$124,580 |
21 yr. 4 mo. |
9 yr. 5 mo. |
$249,160 |
42 yr. 7 mo. |
18 yr. 11 mo. |
|
Austin, TX |
$1,755 |
$308,200 |
$53,713 |
$30,820 |
5 yr. 9 mo. |
3 yr. 6 mo. |
$61,640 |
11 yr. 5 mo. |
6 yr. 11 mo. |
|
Virginia |
$1,485 |
$229,400 |
$49,123 |
$22,940 |
4 yr. 5 mo. |
2 yr. 10 mo. |
$45,880 |
8 yr. 11 mo. |
5 yr. 8 mo. |
|
Nashville, TN |
$1,515 |
$253,500 |
$48,813 |
$25,350 |
5 yr. 0 mo. |
3 yr. 2 mo. |
$50,700 |
10 yr. 0 mo. |
6 yr. 4 mo. |
|
Providence, |
$1,780 |
$293,200 |
$54,107 |
$29,320 |
5 yr. 5 mo. |
3 yr. 3 mo. |
$58,640 |
10 yr. 10 mo. |
6 yr. 7 mo. |
|
Milwaukee, |
$1,385 |
$229,200 |
$51,880 |
$22,920 |
3 yr. 11 mo. |
2 yr. 8 mo. |
$45,840 |
7 yr. 11 mo. |
5 yr. 4 mo. |
|
Jacksonville, |
$1,400 |
$212,100 |
$47,414 |
$21,210 |
4 yr. 2 mo. |
2 yr. 9 mo. |
$42,420 |
8 yr. 5 mo. |
5 yr. 5 mo. |
|
Memphis, TN |
$1,050 |
$139,100 |
$45,538 |
$13,910 |
2 yr. 7 mo. |
1 yr. 10 mo. |
$27,820 |
5 yr. 1 mo. |
3 yr. 8 mo. |
|
Oklahoma |
$1,120 |
$146,400 |
$47,735 |
$14,640 |
2 yr. 7 mo. |
1 yr. 10 mo. |
$29,280 |
5 yr. 2 mo. |
3 yr. 9 mo. |
|
Louisville- |
$1,145 |
$161,200 |
$46,730 |
$16,120 |
3 yr. 0 mo. |
2 yr. 1 mo. |
$32,240 |
5 yr. 11 mo. |
4 yr. 2 mo. |
|
Hartford, CT |
$1,700 |
$229,100 |
$62,210 |
$22,910 |
3 yr. 4 mo. |
2 yr. 3 mo. |
$45,820 |
6 yr. 8 mo. |
4 yr. 6 mo. |
|
Richmond, |
$1,465 |
$228,100 |
$51,641 |
$22,810 |
4 yr. 1 mo. |
2 yr. 8 mo. |
$45,620 |
8 yr. 1 mo. |
5 yr. 4 mo. |
|
New Orleans, |
$1,450 |
$174,600 |
$44,875 |
$17,460 |
3 yr. 10 mo. |
2 yr. 4 mo. |
$34,920 |
7 yr. 8 mo. |
4 yr. 9 mo. |
|
Buffalo, NY |
$1,280 |
$158,100 |
$49,921 |
$15,810 |
2 yr. 9 mo. |
1 yr. 11 mo. |
$31,620 |
5 yr. 7 mo. |
3 yr. 10 mo. |
|
Raleigh, NC |
$1,480 |
$264,800 |
$53,247 |
$26,480 |
4 yr. 6 mo. |
3 yr. 0 mo. |
$52,960 |
9 yr. 1 mo. |
6 yr. 0 mo. |
|
Birmingham, |
$1,050 |
$144,600 |
$49,009 |
$14,460 |
2 yr. 5 mo. |
1 yr. 9 mo. |
$28,920 |
4 yr. 10 mo. |
3 yr. 7 mo. |
|
Salt Lake City, |
$1,615 |
$360,600 |
$51,403 |
$36,060 |
6 yr. 10 mo. |
4 yr. 3 mo. |
$72,120 |
13 yr. 8 mo. |
8 yr. 6 mo. |
