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Rising Down Payments

futureatlas.com

Saving a down payment for a house is a big deal. According to an analysis by Zillow, a median-priced home in the U.S. now costs more than $192,000, which means that buyers have to come up with more than $38,000 to put 20 percent down. That translates into about two-thirds of the average household income. As indicated by CNN Money, that down payment figure fails to include the added expenditures associated with purchasing a home like inspections, closing costs and moving expenses.

The challenge of coming up with a down payment continues to expand as home prices rise across the country. In many markets, home prices are rising much more rapidly than incomes. It’s tougher in some communities than in others.

Homebuyers in California are among the most challenged. For those seeking to own a home in San Jose, San Francisco, or Los Angeles, saving a year’s worth of income wouldn’t cover a 20 percent down payment. These homebuyers will need to save at least 180 percent of the average income in those cities. On the other hand, buyers in Pittsburgh, Indianapolis and Kansas City only have to save 48 percent of the income for their down payment.  

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.