Today’s 18-year-old will need to save $304 every month for the next 12 years in order to accumulate the 10 percent downpayment, plus closing costs, needed to buy a median-priced home, according to a new analysis by Realtor.com
By the year 2031, when Generation Z’s 18-year-olds turn 30, Realtor.com predicted the national median home price will be $386,310. Of course, some markets will be pricier than others. For example, today’s 18-year-olds will need to save $1,962 per month if they live in San Jose, $1,439 per month if they are in San Francisco, and $979 per month if they plan a Los Angeles residence in the next 12 years. At the other end of the spectrum, considerably less savings are required for a 2031 home purchase in Youngstown, Ohio ($108 per month) and McAllen, Texas ($111 per month).
"Choosing to live in one of the U.S.'s larger and more expensive metros, especially on the West Coast, is going to make homeownership a difficult task, but that doesn't mean that Gen Z should give up on their dreams," said Danielle Hale, Realtor.com's Chief Economist. "The most important thing they can do is start saving as much as possible early on and let compound interest do the heavy lifting for them. They may also want to consider more affordable areas or different downpayment amounts. Some widely available programs allow downpayments as low as three percent, but a lower downpayment can mean higher ongoing monthly costs. As with most decisions, there are pros and cons and a buyer needs to think these through to determine what's best for them."