Would-be homebuyers in the U.S. will have to save up for an extra year before taking the plunge, thanks to pandemic-era price gains.
For the typical American, it would take eight years of stashing away 10% of monthly income to build up enough for a 20% down payment -- up from seven years before covid-19 ignited a homebuying frenzy, according to a study by Tomo, a real estate startup.
For many renters hoping to become buyers, scraping together a down payment is a challenge. The hurdles have risen as bidding wars for a tight supply of listings push prices ever further out of reach. The share of previously-owned home purchases by first-time buyers declined to 29% last month, the lowest level since 2019, the National Association of Realtors said this week.
The people who save for a down payment "are the people who can," Skylar Olsen, chief economist at Tomo, said in an interview. "Folks who have a lot of rent burdens tend to save nothing, and there's always a fairly sizable share of the population who have a pretty substantial rent burden."
The areas with the highest years-to-save timelines are Los Angeles, with 19.2, San Francisco, with 17.9 and San Jose, with 18.2, according to the Tomo study.
Northwest Arkansas as a whole faces sharply rising housing costs, but each city in the region has unique aspects to this shared problem, a study released earlier this month by the Walton Family Foundation says.
Housing prices in general, whether to rent or to own, are rising faster in Bentonville than anywhere else in the region, the study found.