Young Adults Living at Home Are Saving for Down Payment
One of the biggest barriers to homeownership for first-time home buyers has been saving for a down payment. But young adults who moved back home during the pandemic—and kept a job—are finding that homeownership may be within reach, according to a new report from realtor.com®.
Eleven months of living at home and saving on rent amounts to about $17,000 in savings—or a 5% down payment that could go toward buying a median-priced home in the U.S., according to the study.
“Although many members of the millennial and Gen Z generations were forced to move home because they lost their jobs in 2020, others chose to forgo their rental because they had the opportunity to work remotely and preferred to wait out the pandemic with family,” says Danielle Hale, realtor.com®’s chief economist. “For those who have been able to channel their would-be rent into savings, the pandemic’s silver lining could be becoming a homeowner soon than they otherwise would have.”
Realtor.com® researchers analyzed listing and rental data for the U.S. and the nation’s 20 largest metros in December 2020 for the study. Researchers found that some metros offered faster ways to save by forgoing rent than others. Take a look at the metro breakdown below. (Including a short discussion on Utah's Market)
Source: realtor.com® and Realtor Magazine
Where does Utah Stand?
The most recent numbers being reported by the Salt Lake Board of Realtors is that the Median Listing Price in November 2020 was $390,000. This means you will need to save a minimum of $19.500.00 for a down payment and, at Utah's median rent rate of around $1600.00, it would take roughly 13 months to save that minimum down payment.
If you are someone that has the option of living at home for a short period of time, it would be great option for you to join the ranks of other young adults around the country looking to do the same.
Why Own Rather than Rent? Seven Reasons:
Tax benefits. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, and some of the costs involved in buying a home.
Appreciation. Historically, real estate has had a long-term, stable growth in value. In fact, median single-family existing-home sale prices have increased on average 5.2 percent each year from 1972 through 2014, according to the National Association of REALTORS®. The recent housing crisis has caused some to question the long-term value of real estate, but even in the most recent 10 years, which included quite a few very bad years for housing, values are still up 7.0 percent on a cumulative basis. In addition, the number of U.S. households is expected to rise 10 to15 percent over the next decade, creating continued high demand for housing.
Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
Predictability. Unlike rent, your fixed-rate mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will likely increase.
Freedom. The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.
Stability. Remaining in one neighborhood for several years allows you and your family time to build long-lasting relationships within the community. It also offers children the benefit of educational and social continuity.
Let us help you put together a plan for purchasing your first home. We offer a Free 1 Hour Consultation Session where we can answer all your real estate questions and design a plan for moving forward.
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