Those Saving for a Down Payment can Afford a Home Nearly Three Years Sooner by Moving Back in with Mom or Dad
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 $225,300(i), 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. renters(ii) - they would have enough saved after eight years.
A typical renter also spends about 34 percent of their income on housing(iii). 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 save(iv). 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 20% Time Time Rent Home Annual Down Spent Down Spent Spent Valuevii Incomeviii Payment Saving Spent Payment Saving Saving Saving Without Without Housing Housing Costs Costs --- 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. Long Beach- Anaheim, CA --- 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. Worth, TX --- 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. PA --- 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. DC --- 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. Lauderdale, FL --- 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. Francisco, CA --- 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. St Paul, MN --- 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. MD --- 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. PA --- 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. CA --- 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. TX --- 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. OH --- 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. OH --- 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. 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. OH --- 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. IN --- 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. Beach, VA --- 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. RI --- 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. WI --- 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. FL --- 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. City, OK --- 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. Jefferson County, KY --- 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. VA --- 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. LA --- 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. AL --- 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. UT ---
HotPads
HotPads is an efficient rental search platform for urban areas across the United States, with features designed for competitive markets such as map-based search, real-time notifications and detailed information on landlords and property managers that help renters spend less time searching and more time feeling excited about their next home.
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.
View original content:http://www.prnewswire.com/news-releases/those-saving-for-a-down-payment-can-afford-a-home-nearly-three-years-sooner-by-moving-back-in-with-mom-or-dad-300803930.html
SOURCE Hotpads, Inc.