Saving for a down payment is one of the biggest barriers to homeownership. For the record number of young adults moved back home during the pandemic fortunate to still have a job, homeownership may be more attainable than they think, according to a new report released today by realtor.com®.
For someone paying the U.S. median one-bedroom rent of $1,533, it would take 11 months to save $17,000, a 5% down payment for a $340,000 home, the median-priced home in the U.S., according to a realtor.com analysis of listing and rental data for the U.S. and the nation’s 20 largest metros in December 2020.
Across the 20 largest metros, it would take longer, an average of 15 months in order to save up for a 5% down payment based on home prices and rent savings in each market. It’s fastest to save for a 5% down payment in Chicago followed by Philadelphia, and St. Louis, while it takes the longest amount of time in Los Angeles, San Francisco, and San Diego.
“Although many members of the millennial and Gen Z generations were forced to move home because they lost their jobs in 2020, others chose to forgo their rental because they had the opportunity to work remotely and preferred to wait out the pandemic with family,” said realtor.com® Chief Economist Danielle Hale. “For those who have been able to channel their would-be rent into savings, the pandemic’s silver lining could be becoming a homeowner sooner than they otherwise would have.”
In Chicago, based on the median rent for a one-bedroom apartment of $1,521, it would take 11 months to save $16,350, a 5% down payment on the median list price home of $327,000. At the opposite end of the spectrum, in Los Angeles, where the median list price for a home is just under $1 million and the median one-bedroom rent is $2,250, it would take 22 months to save for a 5% down payment of $50,000.
Months of Rent Needed to Save for a Typical Down Payment (20 largest metros)
|Atlanta-Sandy Springs-Roswell, Ga.||$1,310||$350,000||$17,500||13|
|Dallas-Fort Worth-Arlington, Texas||$1,125||$354,000||$17,700||16|
|Houston-The Woodlands-Sugar Land, Texas||$1,060||$330,000||$16,500||16|
|Los Angeles-Long Beach-Anaheim, Calif.||$2,250||$999,000||$49,950||22|
|Miami-Fort Lauderdale-West Palm Beach, Fla.||$1,691||$409,000||$20,450||12|
|Minneapolis-St. Paul-Bloomington, Minn.-Wis.||$1,358||$344,000||$17,200||13|
|New York-Newark-Jersey City, N.Y.-N.J.-Pa.||$2,345||$627,000||$31,350||13|
|Riverside-San Bernardino-Ontario, Calif.||$1,610||$475,000||$23,750||15|
|San Diego-Carlsbad, Calif.||$2,000||$797,000||$39,850||20|
|San Francisco-Oakland-Hayward, Calif.||$2,414||$995,000||$49,750||21|
|St. Louis, Mo.-Ill.||$1,035||$232,000||$11,600||11|
|Tampa-St. Petersburg-Clearwater, Fla.||$1,225||$300,000||$15,000||12|