Saving up for a down payment is one of the biggest hurdles cited by first-time homebuyers when it comes to purchasing their abode. Now, according to a new study by Zillow Group's RealEstate.com, it is easier to save for down payment in some cities than in others.
The analysis, that identified 10 metros where first-time buyers could find it easier to save for their future home purchase, factored in the median household income among millennials and their estimated annual household savings to determine how long it would take to save for a 2o percent down payment on typical starter homes.
It found that among all metros, it took buyers in Chicago around three years to save a 20 percent down payment on a home, making it the fastest among all the 35 metros analyzed in the study. Dallas, Detroit, and Baltimore were ranked second, third and fourth with saving for a home taking 3.5, 3.7 and 3.8 years respectively. At 3.9 years, homebuyers in Indiana could also look at being able to buy a home soon. Other cities on this list included Pittsburgh, Pennsylvania; Cleveland, Ohio; St. Louis, Montana; Austin, Texas; and Washington, D.C.
The analysis said that since nearly half (44 percent) of buyers moved outside of their current city with their home purchase, "knowing which metros can help ease some of the down payment burdens can be valuable for first-time buyers considering moving."
Saving for down payments also depended a lot on how much a millennial household was able to save in each city. Giving an example, the analysis revealed that in Portland, Oregon, the estimated savings for a millennial household was $5,288, nearly half of that in Chicago, where average savings were $10,821. "Less savings combined with higher home values means a first-time buyer in Portland would need to save for more than 13 years to reach a 20 percent down payment on a starter home – the longest of the metros analyzed," the report said.
The study also found that it would take more than 10 years for a household to save up for a down payment in Denver, San Jose, and Riverside, California.