Prospective buyers in some of the hottest housing markets in the United States will have to pay more than $180,000 in down payments to secure a home, according to a recent report from real estate data curator ATTOM.
Nine out of the top 10 cities with the largest down payments were in California. San Jose had the largest median down payment at $320,000, followed by San Francisco with $306,375. Los Angeles and San Diego each had median down payments of more than $200,000. Oxnard, Salinas, San Luis Obispo, and Santa Rosa each had median down payments of more than $180,000.
In Boulder, Colorado, the median down payment was $195,000.
“The increase is being influenced by the current market, where higher-priced, turnkey homes in desirable neighborhoods are more likely to sell. It’s also partly due to buyers putting down a higher percentage of the purchase price as a down payment,” the brokerage noted in an Aug. 28 statement.
In June, the typical homebuyer’s down payment stood at 18.6 percent, the highest level in more than a decade, according to Redfin. Nearly three in five make a down payment of more than 10 percent of the purchase price.
“Even if aspiring homeowners save for years, it is often still not enough,” she wrote.
Harris’s proposal has come under criticism, with Kevin O’Leary, the chairman of O’Leary Ventures, warning against instituting such policies.
Home Prices and Down Payments
Since down payments are a percentage of a home’s price, a decrease in home values would result in lower down payments.Home prices are rising because there is a shortage of properties on the market relative to demand, Redfin noted.
“There aren’t enough sellers listing their homes to cause prices to fall and there aren’t enough buyers to create competition to drive prices up significantly,” said Redfin senior economist Sheharyar Bokhari, according to a statement.
“Relatively low sales and gradual price increases will remain the status quo each month until one of those things changes.”
However, “if mortgage rates did come down significantly, that could also create more bidding wars as more buyers enter the market,” Lautz said.
“I think those 2 to 3 percent rates were a once-in-a-lifetime experience, and I would not expect to see that again anytime soon. But if you look at rates historically, we are still at the low end.”