Cities where you can quickly save a 20% home down payment
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How long it takes you to save for a 20% down payment on a home depends in part on where you live.
In a pricey area such as New York City, it could take the typical buyer roughly 10.85 years to save $173,000, which is 20% of the median list price of $865,000 for a home, according to a report by RealtyHop, a real estate investment agency.
RealtyHop measured the “barrier to homeownership” for the top 100 U.S. cities by population. The analysis is based on median list price using more than 1.5 million residential listings, as well as median household income data from the U.S. Census Bureau. It assumes a household saves 20% of its annual gross income and intends to make a 20% down payment.
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In each of the five cities with the lowest barrier to homeownership, the savings timeline is less than four years.
Detroit has the lowest barrier to homeownership, the report found.
In Detroit, potential homebuyers who earn about $39,575 — the median household income in the area — need just 2.53 years to come up with a 20% down payment on a home purchase, the report found. That amounts to $20,000 for a home priced at $100,000.
Cleveland, Ohio, is the runner-up: A potential buyer in the area needs 3.55 years to save $27,800, or 20% of a home that costs $139,000, the median listing price in the area.
Rounding out the top five are Baltimore; Buffalo, New York; and Pittsburgh.
Even in cheap cities, there can be savings roadblocks
Big expenses can derail your down payment savings timeline, even in a city where homes are less expensive.
A separate report by Zoocasa, a Canada-based real estate website and brokerage, found that homebuyers with children on average take longer to come up with a 20% down payment versus buyers without children because of expenses such as child care costs.
Potential homebuyers with children in Detroit, for example, need roughly 20.3 years to save for a 20% down payment from scratch, according to Zoocasa. Meanwhile, homebuyers without children in the area need about 4.2 years to come up with a 20% down payment if they’re starting off without prior savings, the report found.
Rising home prices can represent another challenge, said Jacob Channel, an economist at LendingTree.
“The more expensive real estate is where you want to live, the more you’ll probably want to save for a down payment,” Channel said.
The median list price for homes in Los Angeles, for example, is about $1.13 million, RealtyHop found. LA tops the list of five cities with the biggest barriers to homeownership, followed by Irvine, California; Miami; New York City; and Anaheim, California.
Even the cheapest real estate price on the “high barrier” list — No. 3, Miami — is $699,000, nearly three times pricier…
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