Moving Home Could Help Renters Save for a Down Payment in Less than Two Years
Realtor.com® analysis shows home ownership may be within reach for young people able to channel would-be rent into savings
-- Based on U.S. median one-bedroom rent, it would take 11 months to save for a 5% down payment for the median priced home in the U.S.
-- Eleven months of rent savings is enough to accumulate a 5% down payment for a $327,000 home in Chicago
-- It takes the longest -- nearly 22 months of rent savings -- to save for a 5% down payment for a median priced home in Los Angeles
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 |
5% |
Months of |
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®.
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SOURCE realtor.com
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