Saving for a down payment is one of the most important steps in the homebuying process. But as the average home price eclipses $380,000, the amount buyers need to save up is increasing too. Knowing this, RentCafe [1] analyzed the top 174 metropolitan areas to find out where first-time buyers can save up for a down payment in the shortest amount of time.
In order to complete this analysis, RentCafe used data from the U.S. Census Bureau [2], the Economic Policy Institute [3], Bureau of Labor and Statistics [4], and Zillow [5] to calculate the number of years it would take a two-person household to save for a down payment on a starter home.
All-in-all, homeseekers should look to the Midwest if they want to save up for a down payment the fastest, as it had the highest concentration of cities to make the list.
The analysis found in the 174 areas included in this study, 36%—or 64 metropolitan areas—were cities in which it is theoretically possible to save the recommended 20% needed for a down payment within 10 years. Furthermore, in all of the top 20 metropolitan areas it was found that a down payment could be saved within three years or less based on current market conditions.
Major metropolitan areas largely did not make the list, opting instead for small- to mid-sized markets where incomes were relatively high and cost of living was low.
“Notably, small- to mid-sized metros in the Midwest are the best for first-time homebuyers, and Illinois is the top individual state, with seven metros where incomes and the cost of living allow you to set aside money for a down payment,” the report said. “Namely, the fastest metros to save in are Bloomington and Springfield—both in Illinois—followed by Cedar Rapids, Iowa, and Trenton-Princeton, New Jersey. In these areas, the average family could buy their first home in less than two years.”
The top-20 cities are as follows:
- Bloomington, Illinois
- Time to save for a down payment: 1 year
- Median starter home price: $105,249
- Down payment value: $21,050
- Median income (two-person family): $91,049
- Needs 63% / Wants 15% / Savings 22%
- Springfield, Illinois
- Time to save for a down payment: 1 year, 3 months
- Median starter home price: $81,901
- Down payment value: $16,380
- Median income (two-person family): $81,855
- Needs 68% / Wants 17% / Savings 15%
- Cedar Rapids, Iowa
- Time to save for a down payment: 1 year, 9 months
- Median starter home price: $117,181
- Down payment value: $23,436
- Median income (two-person family): $79,532
- Needs 63% / Wants 20% / Savings 17%
- Trenton, New Jersey
- Time to save for a down payment: 1 year, 10 months
- Median starter home price: $164,490
- Down payment value: $32,898
- Median income (two-person family): $96,196
- Needs 65% / Wants 17% / Savings 18%
- Ann Arbor, Michigan
- Time to save for a down payment: 2 years, 4 months
- Median starter home price: $228,996
- Down payment value: $45,799
- Median income (two-person family): $92,298
- Needs 64% / Wants 15% / Savings 21%
- Bismarck, North Dakota
- Time to save for a down payment: 2 years, 4 months
- Median starter home price: $212,918
- Down payment value: $42,584
- Median income (two-person family): $87,004
- Needs 61% / Wants 18% / Savings 20%
- Bridgeport, Connecticut
- Time to save for a down payment: 2 years, 5 months
- Median starter home price: $303,031
- Down payment value: $60,606
- Median income (two-person family): $112,228
- Needs 62% / Wants 16% / Savings 22%
- Fargo, North Dakota
- Time to save for a down payment: 2 years, 5 months
- Median starter home price: $187,766
- Down payment value: $37,553
- Median income (two-person family): $83,854
- Needs 63% / Wants 19% / Savings 18%
- Madison, Wisconsin
- Time to save for a down payment: 2 years, 6 months
- Median starter home price: $242,538
- Down payment value: $48,508
- Median income (two-person family): $89,899
- Needs 64% / Wants 15% / Savings 21%
- Des Moines, Iowa
- Time to save for a down payment: 2 years, 7 months
- Median starter home price: $154,720
- Down payment value: $30,944
- Median income (two-person family): $80,862
- Needs 66% / Wants 19% / Savings 14%
- Hartford, Connecticut
- Time to save for a down payment: 2 years, 8 months
- Median starter home price: $198,000
- Down payment value: $39,600
- Median income (two-person family): $93,124
- Needs 65% / Wants 20% / Savings 16%
- Fond du Lac, Wisconsin
- Time to save for a down payment: 2 years, 8 months
- Median starter home price: $122,982
- Down payment value: $24,596
- Median income (two-person family): $73,562
- Needs 69% / Wants 19% / Savings 12%
- Champaign, Illinois
- Time to save for a down payment: 2 years, 8 months
- Median starter home price: $102,166
- Down payment value: $20,433
- Median income (two-person family): $80,258
- Needs 73% / Wants 17% / Savings 9%
- Baltimore, Maryland
- Time to save for a down payment: 2 years, 9 months
- Median starter home price: $211,039
- Down payment value: $42,208
- Median income (two-person family): $94,477
- Needs 65% / Wants 19% / Savings 16%
- Waterloo, Iowa
- Time to save for a down payment: 2 years, 10 months
- Median starter home price: $91,403
- Down payment value: $18,281
- Median income (two-person family): $73,403
- Needs 70% / Wants 21% / Savings 9%
- Washington, DC
- Time to save for a down payment: 2 years, 10 months
- Median starter home price: $341,444
- Down payment value: $68,289
- Median income (two-person family): $120,208
- Needs 60% / Wants 21% / Savings 20%
- Cincinnati, Ohio
- Time to save for a down payment: 2 years, 11 months
- Median starter home price: $151,092
- Down payment value: $30,218
- Median income (two-person family): $75,282
- Needs 68% / Wants 19% / Savings 14%
- Akron, Ohio
- Time to save for a down payment: 3 years, 1 month
- Median starter home price: $104,637
- Down payment value: $20,927
- Median income (two-person family): $70,806
- Needs 71% / Wants 20% / Savings 9%
- Decatur, Illinois
- Time to save for a down payment: 3 years, 2 months
- Median starter home price: $46,696
- Down payment value: $9,339
- Median income (two-person family): $69,248
- Needs 76% / Wants 20% / Savings 4%
- Naples, Florida
- Time to save for a down payment: 3 years, 3 months
- Median starter home price: $262,944
- Down payment value: $52,589
- Median income (two-person family): $93,477
- Needs 68% / Wants 15% / Savings 17%
Click here [6] to view the original data on RentCafe.com.