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First-Time Buyers Can Save a Down Payment the Fastest in Chicago and Dallas

It takes an average of three years to save a 20 percent down payment on a starter home in Chicago for first-time buyers, but more than 13 years in Portland, Ore., according to an analysis from RealEstate.com

Saving for a down payment is one of the biggest hurdles to homeownership. However, a new analysis from RealEstate.com, a Zillow Group® brand, identifies 10 metros where first-time buyers may find it easier to save for their future home purchase and 10 metros where it may be more difficult.

In Chicago, a first-time buyer will need about three years to save a 20 percent down payment on the typical starter home – the fastest of the 35 metros analyzed. First-time buyers in Dallas, Detroit and Baltimore may also find saving for a down payment to take less time than in other metros – with the average millennial household needing just under four years to reach a down payment.

RealEstate.com’s analysis factored in the median household income among millennials (ages 24-36) and their estimated annual household savings to determine how long it would take to save for a 20 percent down payment on starter home — or a home priced within the bottom third of the market.

first-time buyers

Since nearly half (44 percent) of buyers move outside of their current city with their home purchase, knowing which metros can help ease some of the down payment burden can be valuable for first-time buyers considering moving.

In Portland, Ore., the estimated annual savings for a millennial household is $5,288 – nearly half of what it is in Chicago ($10,821). Less savings combined with higher home values means a first-time buyer in Portland would need to save for more than 13 years to reach a 20 percent down payment on a starter home – the longest of the metros analyzed. In Denver, San Jose, Calif., and Riverside, Calif., it would take more than 10 years to save a down payment.

While not everyone chooses to put down 20 percent on a home, it is a good goal to aim for, especially for a first-time buyer. According to Zillow Group’s 2017 Consumer Housing Trends Report, 37 percent of first-time buyers (45 percent of all buyers) choose to put 20 percent down or more on their home purchase.

“Contrary to popular belief, millennials want to buy homes, but high home prices, low inventory and stagnant wage growth are some of the many factors that may be driving would-be buyers into delaying homeownership,” says Justin LaJoie, RealEstate.com General Manager. “However, in certain U.S. housing markets first-time buyers can find some relief; they just need to know where to look.”

To help first-time buyers better understand the total cost of homeownership, RealEstate.com allows home shoppers to search based on homes’ “All-In Monthly Price,” which includes estimates for costs such as mortgage, property tax, and utilities, giving them a more accurate picture of the cost of homeownership.

Markets where first-time buyers can save for a down payment the fastest:

Metro Name Annual
Income
Among
Millennial
Households,
2018-Q1 (Est)
Annual
Savings
Among
Millennial
Households,
2018-Q1
(Est)
Median
Home Value,
Entry Level
Single-Family
Home (2018-
Q1)
20 Percent
Down
Payment on
Median Entry-
Level Home
Years to
Save for 20
Percent
Down
Payment
on Median
Entry-Level
Home
Chicago, IL $50,500 $10,821 $177,300 $35,460 3 years 3 months
Dallas-Fort Worth, TX $50,600 $10,843 $185,400 $37,080 3 years 5 months
Detroit, MI $43,100 $5,388 $96,700 $19,340 3 years 7 months
Baltimore, MD $54,300 $11,636 $214,000 $42,800 3 years 8 months
Indianapolis, IN $39,400 $6,567 $122,500 $24,500 3 years 9 months
Pittsburgh, PA $41,700 $5,212 $103,600 $20,720 4 years
Cleveland, OH $42,900 $5,362 $109,600 $21,920 4 years 1 month
St. Louis, MO $43,200 $5,400 $119,900 $23,980 4 years 5 months
Austin, TX $50,700 $10,864 $249,700 $49,940 4 years 7 months
Washington, DC $67,900 $14,550 $343,000 $68,600 4 years 9 months

 

Markets where it takes first-time buyers longer to save for a down payment:

Metro Name Annual
Income
Among
Millennial
Households,
2018-Q1 (Est)
Annual
Savings
Among
Millennial
Households,
2018-Q1
(Est)
Median
Home Value,
Entry Level
Single-Family
Home (2018-
Q1)
20 Percent
Down
Payment on
Median Entry-
Level Home
Years to
Save for 20
Percent
Down
Payment
on Median
Entry-Level
Home
Portland, OR $42,300 $5,288 $347,200 $69,440 13 years 2 months
Denver, CO $47,100 $5,888 $365,600 $73,120 12 years 5 months
San Jose, CA $94,900 $18,980 $1,133,100 $226,620 11 years 11 months
Riverside, CA $47,600 $5,950 $306,200 $61,240 10 years 4 months
Miami-Fort Lauderdale, FL $41,900 $5,238 $269,500 $53,900 10 years 3 months
Los Angeles-Long Beach-Anaheim, CA $52,700 $11,293 $575,200 $115,040 10 years 2 months
San Diego, CA $52,500 $11,250 $543,400 $108,680 9 years 8 months
San Francisco, CA $83,300 $16,660 $795,800 $159,160 9 years 7 months
Las Vegas, NV $46,100 $5,762 $241,400 $48,280 8 years 5 months
Phoenix, AZ $43,000 $5,375 $224,300 $44,860 8 years 4 months

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