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How Long Does It Take Different Generations To Save For A Down Payment?

Navi Persaud
Mar 18, 2021
Photo of a spilled jar of coins.

A recent report published by Point2Homes took a look at how long it would take different generations to save up for a down payment on a home, based on income and home price data for the 100 most populous cities in the U.S. The company found that a Gen Z buyer in Irvine, CA would have to save for more than their average life expectancy, however, in some of the larger Midwest cities, the report states that a higher-earning Gen X buyer could save up enough in just two years.

"Being able to save enough for the down payment is the first hurdle on the path to homeownership. But, up until the spring of 2020, the national average savings rate had hovered around a meager 8%," according to the report.

"Then, the pandemic completely changed Americans’ saving habits. For instance, in the past year, the national average savings rate ballooned to 17% — which means that people have been setting aside much more."

According to the report, saving up for a home can take anywhere between two years to close to 94 years depending on the generation and cities that those individuals choose to settle down.

"Gen Z — a generation on the cusp of adulthood and the newest to enter the workforce — has the lowest incomes and that’s why they’re also looking at the longest period of time needed to save for a down payment," according to the report.

"For example, it could take between 23.5 and 20.9 years to save enough for a down payment in expensive cities like Los Angeles and San Jose, Calif., whereas it could be less than five years in cities such as Fort Wayne, Ind.; Buffalo, N.Y.; Garland, Texas; Cleveland, Ohio; and Detroit. Clearly, in some cities, Gen Z buyers might need to save for a very long time if they don’t have help."

The report also states that Millennials would need more than 10 years to save for a down payment in four California cities like Los Angeles, Long Beach, Oakland and Santa Ana, while Gen X and younger Baby Boomers might have affordability problems in San Francisco, Los Angeles, New York and Oakland. Meanwhile, older Baby Boomers (those in the 65+ age group) are looking at no fewer than 24 cities where it would take more than 10 and even more than 20 years to save for the recommended 20% down payment.

Click here to learn more from the Point2Homes report and check out the publication's infographic below.


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