It takes a typical renter in the U.S. eight years to save for a 20 percent down payment, compared to about five years for renters without housing expenses.
— In expensive markets like Southern California and the San Francisco Bay Area, saving for even a 10 percent down payment can take more than a decade.
— Savers can reach their down payment goals the fastest in Pittsburgh and Cleveland.
— More than half of first-time buyers put down less than 20 percent.
SAN FRANCISCO, Feb. 28, 2019 /PRNewswire/ — Housing expenses add two years and 10 months to the time it takes a typical renter to save for a 20 percent down payment on the median U.S. home, according to a new HotPads® analysis.
The median home value is $225,300i, meaning a 20 percent down payment is about $45,000. If a renter earning the median annual income saves 16.5 percent of their income after accounting for housing costs each month – the typical rate of savings for U.S. rentersii – they would have enough saved after eight years.
A typical renter also spends about 34 percent of their income on housingiii. If a renter making the median income eliminated their housing expenses and increased their monthly savings proportionally, they would have enough saved for a 20 percent down payment on the median home after 5 years and 2 months – almost three years sooner than those who pay rent and save for a down payment simultaneously.
Saving for a down payment can be a significant barrier to homeownership, and rising rents can make it harder for renters to saveiv. Median rents have risen about 3% over the past year, while home values have grown 7.5%.
“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.”
Moving in with family can make it easier for renters to save, particularly in expensive markets where housing costs account for a larger share of incomes. In San Jose and San Francisco, renters typically spend more than half their income on housing, and saving for a 20 percent down payment could take more than 38 years for a renter with the median income.
While a 20 percent down payment is often a goal, 60 percent of first-time buyers end up putting down less than 20 percent, according to the 2018 Zillow Group Consumer Housing Trends Report. A typical renter looking to put 10 percent down on the median home ($22,530) needs four years to save for a down payment, while someone with the typical renter income and no housing expenses typically could save this amount more than two years earlier, after two years and seven months.
HotPads is a Zillow® Group-owned apartment and home search platform for renters in urban areas across the United States. For more information on the U.S. rental market, visit HotPads.com.
10% Down Paymentv | 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. |
HotPads
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Launched in 2005, HotPads is based in San Francisco and is owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG).
HotPads is a registered trademark of Zillow, Inc.
i Zillow’s January 2019 Market Report.
i Bureau of Labor Statistics Consumer Expenditure Survey, 2017.
iii Bureau of Labor Statistics Consumer Expenditure Survey, 2017.
iv 2018 Zillow Group Report on Consumer Housing Trends. https://www.zillow.com/report/2018/overview/foreward/
v Assumes renters save 16.5 percent of their income after housing costs based on data from the 2017 Bureau of Labor Statistics Consumer Expenditure Survey
vi Assumes renters save 16.5 percent of their income after housing costs based on data from the 2017 Bureau of Labor Statistics Consumer Expenditure Survey
vii Median home prices from Zillow’s January 2019 Market Report.
viii Bureau of Labor Statistics Consumer Expenditure Survey, 2017.
SOURCE Hotpads, Inc.