The housing market has been on a rollercoaster over the past year. In early 2022, prices rose at breakneck speed. In fact, the average price for single-family homes with mortgages spiked nearly 20% between February 2021 and February 2022. Now, Americans are seeing prices cool after the Federal Reserve announced a series of interest rate hikes. This has raised mortgage rates, however, squeezing buyer budgets and making the homebuying process daunting in new ways.
Keeping this in mind, SmartAsset set out to calculate how many years of work are needed to afford a down payment in each city. To do this, we used median income figures and assumed that workers would save 20% of their income each year for 20% and 12% down payments on a median home. Details on our data sources and how we put all the information together to create our final rankings can be found in the Data and Methodology section below.
This is SmartAsset’s sixth study on how many years of work it takes to afford a down payment. You can read the 2021 edition here.
Key Findings
- To afford a 12% down payment, buyers in the top 10 cities need to work for more than 4.5 years. In first-ranking Los Angeles, homebuyers will need to work 6.93 years to afford a 12% down payment and 11.55 years (more than double the average) to afford a 20% down payment. This will take homebuyers almost two years longer than in the 10th-ranking San Diego (4.96 years) for a 12% down payment and more than three years (8.26 years) for 20%.
- California dominates the top 10. Six of the top 10 cities in our study are located in the Golden State. These include Los Angeles, San Francisco, Oakland, Long Beach, San Jose and San Diego. Out of the six, Long Beach has the lowest median home value ($693,600), which is almost $10,000 more than the median home value in New York ($685,700). And San Francisco has the highest ($1,306,400) median home value in the study.
- Homebuyers in Los Angeles have to save roughly six times longer than those in the bottom-ranking Detroit. For the Motor City, it will take roughly 1.15 years to afford a 12% down payment and 1.92 years for those wishing to put down 20%. For context, the median household income in Los Angeles is less than double that of Detroit.
1. Los Angeles, CA
Residents in Los Angeles have the longest timeline to save for a down payment. The average number of years of work needed for a 12% down payment is almost seven years (6.93 exactly). The average for a 20% down payment is 11.6 years. The median home value is $812,800, which has gone up by $115,600 from our 2021 study ($697,200).
2. San Francisco, CA
San Francisco moved up one spot from the 2021 study, beating out Oakland for No. 2. The median home value in San Francisco is $1,306,400 – one of two cities in the entire study with a median home value over $1 million. Homebuyers will have to save $261,280 for almost 11 years (10.72) to afford a 20% down payment.
3. Oakland, CA
Oakland is the third-ranked California city in our top 10. Homebuyers here need almost 6.2 years for a 12% down payment and just over 10.3 for 20%. The median income is $82,236, which is almost $12,000 higher than the top-ranked Los Angeles ($70,372).
4. New York, NY
Homebuyers in New York have the fourth-highest down payment savings timeline. They need roughly 10 years for a 20% down payment and about six years to put forth 12%. The median home value is $685,700, which means that a 20% down payment is $137,140.
5. Long Beach, CA
Long Beach, California, claims the fifth rank with a median home value of $693,600. This is a jump of over $79,000 from $614,400 in 2021. Homebuyers will need to put in $138,720 for a 20% down payment in 9.39 years. And $83,232 for 12% in 5.63 years.
6. San Jose, CA
Commonly known as the heart of Silicon Valley, San Jose claims sixth place with a median home value of $1,119,500. A 20% down payment will cost $223,900 and $134,340 for a 12% down payment. The median household income in the city is $126,377, so prospective buyers can expect to save 8.86 years for a 20% down payment and 5.32 years for 12%.
7. Miami, FL
Miami has the lowest median home value in the top 10 ($411,300). But homebuyers here also have a low median household income ($48,789). Their savings timeline is 8.43 years for a 20% down payment ($82,260) and 5.06 years ($49,356) for a 12% down payment.
8. Boston, MA
Prospective homebuyers in Boston can expect to save for nearly five years for a 12% down payment of $79,164 and 8.32 years for a 20% down payment of 131,940. The median home value is $659,700, which is the second-lowest in the top 10 of our study.
9. San Diego, CA
San Diego has a similar savings timeline as Boston, needing 4.96 years for a 12% down payment and 8.26 for 20% down payment. However, the median home value in San Diego is more than $100,000 higher ($768,800) than in Boston. And homeowners in this California city also have a higher median household income ($93,042) when compared with Boston at $79,283.
10. Seattle, WA
Seattle rounds out the top 10. Homebuyers here will need almost 4.6 years to save $101,772 for a 12% down payment. And 7.66 years for a 20% down payment of $169,620. The median home value is $848,100, and the median household income is $110,781.
Data and Methodology
To rank the cities where it takes the longest for an average household to save for a down payment, we analyzed data on the 50 largest U.S. cities. We specifically considered two pieces of data:
- 2021 median home value.
- 2021 median household income.
Data for both factors comes from the Census Bureau’s 2021 1-year American Community Survey.
To calculate how many years of work are needed to afford a down payment in each city, we first determined the average savings for each household. To do so, we assumed a household would save 20% of the median annual pre-tax income. Next, we determined how much a 20% down payment as well as a 12% down payment for the median home in each city would cost. Then, we divided each of the estimated down payments in each city by the estimated annual savings.
The result was the estimated number of years of saving needed to afford each down payment, assuming zero savings to begin with. Finally, we created our final ranking by ordering the cities from the greatest number of years needed to the least number of years needed for each.
Tips for Hassle-Free Home Buying
- Consider investing in expert advice. If you’re thinking of buying a home or starting to save, consider working with a financial advisor before you take the plunge. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Prevent potential mortgage mishaps. The payments don’t stop after you’ve put money down; you’ll also need to make mortgage payments. Figure out what those might be before you move forward by using SmartAsset’s mortgage calculator.
- It pays to read the fine print. When thinking about your home-buying transaction, don’t forget closing costs. These may seem small compared to the down payment, but every dollar counts.
Questions about our study? Contact press@smartasset.com.
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