Here’s How Much Extra You Need to Save to Keep Up with Rising Home Prices
Saving up to buy a home next year? You might need to put aside a little extra to keep up with rising home costs. According to a recent report from Zillow, the national median home will be worth $6,275 more a year from now—meaning that, on average, U.S. homebuyers will need to save an extra $105 a month (a total of $1,260 for 12 months) to keep up with the cost of a 20 percent down payment.
What that means is, if you were previously putting away $500 a month for your future home goal, you’ll need to crunch the numbers again and bump that auto-draft up to more than $600. (Just another reason that buying before you have 20 percent down can be a smart move sometimes.)
But that $105 stat reflects just the national median; since the housing market is different depending on what metro area you’re in, that number could be lower or higher where you live.
In St. Louis, for example, where housing prices are expected to rise the least, the average extra monthly savings a homebuyer would need is $55. The Philadelphia, Miami-Fort Lauderdale, Cleveland, Pittsburgh and San Antonio areas are also on the lower end of the spectrum. On the other hand, in San Jose, home values are expected to rise by $35,934 by the end of next year — that’s a staggering additional $599 a month. In Portland, Boston, and several other California metro areas, home values are also expected to be quite a bit higher.
You can see the full chart of expected home prices at Zillow.
Need help saving some extra cash to keep up with the housing market—or just buying your first home in general? Here are some of our best tips for saving money, and what you need to know about saving up for a down payment and making your home-owning goals a reality next year.