Forget Avocado Toast: Here’s How Long It Takes Millennials to Save for a Down Payment
Contrary to what some might believe, avocado toast isn’t what’s keeping Millennials from buying houses—rather, a shortage of affordable homes is stopping prospective homebuyers from their purchasing dreams, no doubt combined with things like student debt (according to Forbes, more than 44 million people face a total of $1.3 trillion of student debt, more than any other kind of debt, outside of mortgages).
Buying a home isn’t easy or cheap—down payments, especially if you have to pay a full 20 percent is a big ask and it can take quite a long time to save up enough. But exactly just how long will it possibly take for Millennials at their average rate of saving, to have enough for a down payment on a home? Apartment List did the math in a recent study, and the results are frustrating, although perhaps not that surprising.
Based on their current rate of monthly savings, Millennials in most of the large metro areas in the US, would need at least a decade (in some cases, nearly two) to save up for a 20 percent down payment on a condo.
The area with the largest wait time to buy a home? San Jose, where it would take most Millennials almost 24 years to save up for a 20 percent down payment. Millennials in San Francisco, San Diego, Los Angeles, and Austin would all face a wait time of at least 19 years to save up for a home.
Even in Kansas City, where the wait time was the shortest, Millennials would need at least 5 and a half years to save up for a home. And if the down payment were lowered to 10 percent there, only 1 in 3 Millennials would be able to save up the full amount in that same time period.
According to the study, 80 percent of Millennial renters in 2016 said they wanted to buy a home (only 5 percent said they plan to always rent), but 72 percent can’t currently afford one, and over two-thirds of Millennials have less than $1,000 in down payment savings.
And down payments aren’t the only obstacle Millennials face when it comes to buying a home, although 53 percent of respondents in the study said it was a big issue. Along with that, 36 percent said the monthly payments would be a challenge, and 29 percent said having a low credit score would be a factor as well.