Aspiring homeowners face obstacles in saving for a down payment

  • Saving for a down payment is a major hurdle for aspiring homeowners
  • 38% of first-time home buyers find saving for a down payment difficult
  • Top three reasons for not being able to save: high monthly rent or mortgage payment, student-loan debt, and auto-loan debt
  • Typical down payment for first-time buyers is 8% of the home price
  • Repeat buyers have the advantage of using proceeds from the sale of their previous home for a down payment
  • Student debt and auto-loan debt are major factors preventing buyers from saving
  • Buyers continued to factor student debt payments into their calculations despite the pause during the pandemic
  • Auto-loan debt is on the rise, making it harder for buyers to save
  • Buyers who paid down debt while saving for a down payment waited for a median of four years to purchase a home
  • First-time buyers often make sacrifices to afford their home purchases

Saving for a down payment on a home is a significant challenge for aspiring homeowners. According to a report from the National Association of Realtors, 38% of first-time home buyers find saving for a down payment to be the most difficult step in the home buying process. The top three reasons cited for not being able to save are high monthly rent or mortgage payments, student-loan debt, and auto-loan debt. The typical down payment for first-time buyers is 8% of the home price, which amounts to approximately $32,000 for a median-priced home of $400,000. Repeat buyers have the advantage of using the proceeds from the sale of their previous home to fund a new purchase, making it easier for them to come up with a down payment. However, both first-time and repeat buyers face challenges due to student debt. Nearly 40% of first-time buyers and 16% of repeat buyers have student debt, with a median amount of $30,000. Despite the temporary pause on student loan payments during the pandemic, buyers still consider these payments when planning for a home purchase. Another major factor preventing buyers from saving is auto-loan debt. The share of car buyers with monthly auto payments of $1,000 or more reached a record high of 17.5% in the third quarter. This increase in auto-loan debt makes it even harder for buyers to save for a down payment. Buyers who manage to pay down their debt while saving for a down payment typically wait for a median of four years before making their home purchase. Many first-time buyers make sacrifices to afford their homes, such as cutting spending on luxury goods, entertainment, and clothes. Overall, the challenges of saving for a home are influenced by high rent, student debt, and auto loans. Aspiring homeowners need to navigate these obstacles in order to achieve their dream of homeownership.

Factuality Level: 7
Factuality Justification: The article provides information from a new report by the National Association of Realtors, which gives credibility to the information presented. The article also includes statistics and quotes from experts. However, there is a lack of diverse perspectives and potential biases in the reporting.
Noise Level: 3
Noise Justification: The article provides relevant information about the challenges faced by aspiring homeowners in saving for a down payment. It includes statistics from a report by the National Association of Realtors and highlights the reasons why saving for a down payment is difficult for first-time buyers. The article also mentions the median down payment amount and the struggles faced by repeat buyers. It provides insights into the impact of high rents, student loan debt, and auto loan debt on saving for a down payment. Overall, the article stays on topic, supports its claims with data, and provides actionable insights for potential home buyers.
Financial Relevance: No
Financial Markets Impacted: No
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article does not pertain to financial topics and does not describe any extreme events.
Public Companies: National Association of Realtors (null), Edmunds (null)
Key People: Jessica Lautz (Deputy Chief Economist and Vice President of Research at the NAR)

Reported publicly: www.marketwatch.com