Savings Slog: Why It Now Takes a Decade to Save for a Down Payment

Savings Slog: Why It Now Takes a Decade to Save for a Down Payment

By the time today’s young adults can afford to buy a house, they may no longer be so young.

In fact, they may already have a head full of gray hair.

At least that's what new research from RealtyTrac suggests: With the current national savings rate of 5.6%, it takes a whopping 12 years or more to save up for a 20% down payment.

And that doesn’t just apply to super-pricey locales, like New York City and San Francisco. The study looked at affordability in more than 500 counties across the U.S., where the median price of a home is $259,000 and a 20% down payment is $51,800.

However, if the down payment requirement for conventional loans were lowered from 20% to 3%—a suggestion made by Melvin Watt, director of the Federal Housing Finance Agency—it would take just two years to save up enough, MarketWatch reports.

For Millennials, who make up the bulk of first-time homebuyers, the lengthy process of saving for a down payment is a potentially huge deterrent to purchasing a place. One report found that the average worker doesn’t earn the national median salary until age 30—which means that she might not be able to buy a house until she hits 42.

The problem is also worse for young men, who face higher rates of un- and under-employment, MarketWatch reports. Today, young men earn just 58% of the average wage, compared to 85% in 1980.

In the market for a new home—but unsure if you'll be able to afford it within the next decade? Check out our guide to figuring out how much you can realistically shell out for your new digs.

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