10 Cities Where Home Buyers Make the Highest Downpayments

During the COVID-19 pandemic, demand for single-family housing surged as supply constraints reduced inventory. These conditions not only sent home values soaring, but also gave mortgage lenders and sellers greater leverage in negotiating the terms of home sales. While in recent months these conditions have changed drastically, buyers in many markets are now also forced to put down more cash up front. 

According to realtor.com, a real estate data platform, the average down payment for a single family home hit 14% in 2022, up from 11% in 2019. Using the most recent national median home value as reported by the U.S. Census Bureau, this means the average down payment rose from about $31,000 to over $39,000 in the three-year period. (Here is a look at the states where home values increased the most during COVID.)

Historically, banks have required homebuyers to make a downpayment of at least 20% of the sale price. But in many U.S. metropolitan areas, average down payments are considerably higher than that. 

Using September 2022 home sale data, realtor.com compiled a list of cities where buyers need a large down payment. 24/7 Wall St. identified the 10 U.S. metro areas with the highest average down payments. Realtor.com considered the average down payment in America’s 300 largest metro areas, limiting the rankings to one per state to ensure geographic diversity. For each market we added relevant data from the U.S. Census Bureau’s 2021 American Community Survey.

High average down payments are indicative of tight housing markets in high demand areas, and, not surprisingly, many of the metro areas on this list also have higher than average home values. The median home purchase price on the places on this list ranges from $375,000 to $900,000, all well above the national median home value of $281,400. (Here is a look at the cities with the most expensive homes.)

Another common feature many of the housing market on this list share is that they are popular vacation and retirement destinations. Historically, down payment rates for second homes have been far higher than for primary residences. And places on this list, which include parts of Hawaii; Boulder, Colorado; and Cape Cod, Massachusetts, are popular spots for vacation homes.

Click here to see 10 cities where home buyers make the highest downpayments.

Click here to see our detailed methodology.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three 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.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.

Source: Read Full Article