First time buyers in the US face five to 11 years of saving for a down payment
It takes 11 years for a single first time buyer in the United States to save for a down payment on a home, six years longer than a couple, new research shows.
Overall, less than half of homes on sale are affordable for someone buying on their own and a couple can afford a property worth twice as much, according to the latest report from real estate firm Zillow.
A 20% down payment is needed for the typical first time home in the US but certain markets are way beyond them, such as San Jose in California as it would take 30 years for a single buyer to save, longer even than the average timespan of a home loan.
Zillow’s analysis combined home values and income data from the Census to estimate how long it would take for both an individual and couple to save for a 20% down payment on the median priced home, assuming they saved 10% of their income every year.
Single buyers typically have a smaller budget than couples, which leaves them with fewer homes to choose from and limits them to the most in-demand portion of the housing stock.
On top of this the number of homes for sale is limited across the country, down nearly 11% over the past year, and nearly 18% for the least expensive homes. A single person could afford to buy 45% of the housing stock, compared to a married or partnered couple, who could afford 82% of all homes.
‘Nearly two thirds of Americans agree that buying a home is a central part of living the American Dream, but for unmarried or un-partnered Americans, that dream is increasingly out of reach,’ said Zillow senior economist Aaron Terrazas.
‘Single buyers typically have more limited budgets, which means they are likely competing for lower priced homes that are in high demand. Having two incomes allows buyers to compete in higher priced tiers where competition is not as stiff,’ he added.
The difference between what a single person could afford compared to a couple is greatest in Portland, Oregon, and Sacramento, California. In Portland 73% of homes are affordable to a couple, but only 6% are affordable to a single buyer.
For Sacramento buyers, a couple could afford 75% of homes while a single home buyer could afford 8% of homes, the data also shows.
Single buyers will have it easiest in Indianapolis, where saving for a down payment takes less than eight years, and they can afford the highest share of homes among the largest American housing markets.