It will take the average U.S. renter over six years to save up for a 20% down payment on a home, according to research from Zillow affiliate HotPads.
The median home value in the U.S. is $216,000, which means a 20% down payment would be $43,200. If a renter making the median income saves 20% of their income each month – as financial experts recommend–they would have enough for a down payment in 77 months, which is almost six and a half years.
The median home value has been climbing for quite some time, and coupled with the cost of rent, the time it takes to save up for a home is ballooning quickly. The typical renter spends 34% of their income on rent, qualifying them as rent burdened.
“While some high earners may manage to save more than the recommended 20% of their income, or may have the good fortune of windfalls such as family assistance, inheritance, or large bonuses, most young adults struggle to save,” HotPads Economist Joshua Clark said in a statement.
Sustained increases in home values and rents suggest that lower down payments may become more popular as first-time buyers continue to be pinched on both sides of the market."
According to the report, in 13 of the 35 largest U.S. metros, it can take more than 10 years to save enough for a 20% down payment.
In the most expensive markets like Los Angeles, San Jose and San Diego where renters spend more than 55% of their income on rent, it could take them up to 22 years to save for a 20% down payment. For many people in the U.S., the dream of one day owning a home is distant at best.
"Home prices are outpacing incomes in many of the country's largest markets, which makes saving for a home more difficult,” Clark said.
“On top of that, the current generation of first-time buyers is dealing with unprecedented levels of student debt, making the down payment a major factor keeping young renters out of the housing market even though many young people say they have ambitions to buy.”
It should be noted that Freddie Mac, Fannie Mae, and the Federal Housing Administration all offer mortgage programs that require much lower down payments, but saving up the traditional 20% down payment just keeps getting more difficult.