Down payments are one of the biggest barriers to homeownership, and recent research found 75% of current prospective buyers have saved much less than the average down payment. The national average savings rate in the U.S. hovered at 8% for some time before reaching 17% in spring 2020 when the pandemic went into full swing, according to Point2. But as home prices rise to a median price of $350,000, the standard 20% down payment is $70,000. From the 75% of buyers who have much less saved up, 14% of prospective buyers had no savings at all. And it would take Gen Z buyers more than 10 years to save up enough to purchase in 36 cities, finds Point2.
- In the past year, the national average savings rate increased from 8% to an impressive 17%.
- Home prices recorded an accelerated growth, and the standard down payment on a home followed suit, almost cancelling homebuyers’ saving efforts.
- The national median home sale price is almost $350,000, meaning the standard 20% down payment is close to $70,000.
- At the current savings rate, Gen Z buyers would need more than ten years to save enough for a down payment in 36 cities.
- On the bright side, Millennials, Baby Boomers and Gen X buyers would need over ten years of saving in only four cities, meaning 96 urban centers are slightly more affordable markets for the older generations.
- A Point2 in-house survey done in autumn last year revealed 50% of home seekers would like to buy in the next six months, but 30% of all respondents expected to need less than $10,000 for a down payment and almost half of the survey takers had less than $10,000 in savings.
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