While record-breaking price growth has raised homeowners' equity to historic levels, it has also made it nearly impossible for first-time buyers to save for a down payment.
Tomo said it took the typical borrower 7.9 years to accumulate 20% less in June, compared to 7.1 years in January 2020. This assumes a high savings rate of 10% of income per month for most consumers.
Among the top 50 metro districts, the red-hot Boise, Idaho market, saw the biggest jump in time to save over the period, from 9.3 to 12.5 years. San Diego rose from 14.6 to 16.8 years and Austin, Texas – which is forecast to be the hottest market for house price growth in 2022 – rose from 8 to 10.1 years – as of 3/17. The lowest savings times were recorded in Rochester, N.Y., at 5.7 years, and Pittsburgh and Oklahoma City at 5.8 years each.
“The down payment becomes more and more difficult to build up over time. That means many first-time buyers will need lower down payment options than ever before to complete their purchase, ”Tomo Chief Economist Skylar Olsen said in a statement to NMN. “First-time buyers are increasingly turning to their mortgage lenders to understand all of their options and that could mean trying different products like FHA loans because keeping up with the down payment on this type of upgrade is exhausting.
With prices skyrocketing – especially for starter homes – and a mandate from the Biden administration to increase home ownership, down payment support programs are gaining increasing attention. For example, the latest infrastructure law calls for a down payment of up to $ 25,000 for first-time home buyers.
The annual home price surge hit a 42-year high in June, and the digital mortgage and home purchase platform report showed the month's 2.1% growth rate from May was the largest ever, and that alone was average 1.7 months to the 20% lower timeline savings.
However, the profit in June turned out differently everywhere. Prospective buyers in Boise took an additional 6.1 months to save, followed by 5.3 months in Austin and 4.8 months in San Diego. The lowest were 0.7 months in Baton Rouge, La., And 0.8 months in Albany and Syracuse, N.Y., and Little Rock, Ark.