College leavers in some US housing markets may just have saved enough to buy their first home by the time they retire!
The hottest housing markets – including California’s San Jose and Los Angeles – have prices so far outpacing average incomes that it would take renters more than 35 years to save a 20% down payment for a median value home.
And that assumes that wage rises tracked home price appreciation, which has not been the case for years. It also relies on renters saving 20% of their monthly pay cheque, which isn’t easy in markets where rents can swallow up 55% of income.
An analysis from HotPads shows that the average renter in the US faces six years of saving for a down payment with Detroit, Cleveland, and Indianapolis providing the shortest wait to become a first-time buyer at around 4 years.
"Home prices are outpacing incomes in many of the country's largest markets, which makes saving for a home more difficult. On top of that, the current generation of first-time buyers is dealing with unprecedented levels of student debt, making the down payment a major factor keeping young renters out of the housing market even though many young people say they have ambitions to buy,” commented HotPods economist Joshua Clark.
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