Moving Home Could Help Renters Save for a Down Payment in Less than Two Years

Rhea-AI Summary

Realtor.com® reports that young adults moving back home during the pandemic can save for a home down payment more easily. Paying the U.S. median rent of $1,533 allows them to save $17,000 in 11 months, equating to a 5% down payment on a $340,000 median-priced home. In the top 20 metro areas, it takes an average of 15 months to save for this down payment. Cities like Chicago and Philadelphia offer the quickest savings, while areas such as Los Angeles and San Francisco take the longest, up to 22 months.

Positive

• Young adults can potentially save for homeownership faster due to reduced rent costs while living at home.
• The report highlights cities like Chicago and Philadelphia where down payment savings can be achieved in 11 months.

Negative

• In high-cost areas like Los Angeles, it takes up to 22 months to save for a 5% down payment, posing a challenge for renters.

SANTA CLARA, Calif., Jan. 28, 2021 /PRNewswire/ -- Saving for a down payment is one of the biggest barriers to homeownership. For the record number of young adults who 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 realtor.com^®'s 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)

Metro	1-bed Median Rent	Median Listing Price	5% Down Payment	Months of Saving for Down Payment
Atlanta-Sandy Springs-Roswell, Ga.	$1,310	$350,000	$17,500	13
Boston-Cambridge-Newton, Mass.-N.H	$2,109	$649,000	$32,450	15
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.	$1,521	$327,000	$16,350	11
Dallas-Fort Worth-Arlington, Texas	$1,125	$354,000	$17,700	16
Denver-Aurora-Lakewood, Colo.	$1,495	$533,000	$26,650	18
Detroit-Warren-Dearborn, Mich.	$970	$252,000	$12,600	13
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
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md	$1,495	$327,000	$16,350	11
Phoenix-Mesa-Scottsdale, Ariz.	$1,195	$413,000	$20,650	17
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
Seattle-Tacoma-Bellevue, Wash.	$1,657	$628,000	$31,400	19
St. Louis, Mo.-Ill.	$1,035	$232,000	$11,600	11
Tampa-St. Petersburg-Clearwater, Fla.	$1,225	$300,000	$15,000	12
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.	$1,767	$497,000	$24,850	14

Methodology: To calculate down payment savings realtor.com^® analyzed listing and rental data from December 2020. The national median down payment was 5 percent in December.

About realtor.com^®

Realtor.com^® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com^® pioneered the world of digital real estate more than 20 years ago, and today through its website and mobile apps is a trusted source for the information, tools and professional expertise that help people move confidently through every step of their home journey. Using proprietary data science and machine learning technology, realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, realtor.com^® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit realtor.com^®.

Media Contact

Janice McDill, janice.mcdill@move.com

 

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SOURCE realtor.com

FAQ

How long does it take to save for a down payment in the U.S.?

It takes approximately 11 months to save for a down payment based on the median rent.

Which metro areas are fastest to save for a home down payment?

Chicago and Philadelphia are among the fastest, taking around 11 months.

What is the average 5% down payment for a median-priced home in the U.S.?

The average 5% down payment is about $17,000 on a $340,000 median-priced home.

What is the impact of the pandemic on homeownership for young adults?

The pandemic has created opportunities for young adults to save for homeownership by reducing rental expenses.

What are the challenges of saving for a down payment in expensive cities?

In cities like Los Angeles, it can take over 22 months to save enough for a down payment due to high rents.