Here Are The 15 Cities Where Homebuyers Are Dropping The Heftiest Down Payments

Author: Bibhu Pattnaik | November 19, 2023 03:11pm

As the housing market in the U.S. continues its remarkable ascent, the landscape of home buying is seeing a significant shift in down payment trends. 

What Happened: According to a study by Realtor.com, the overall percentage of down payments decreased in 2023 compared to the previous year.

However, particular areas, especially in California, are witnessing homebuyers making substantial down payments, often surpassing the $100,000 mark.

Analysis of data from the top 150 real estate markets up to September 2023 by Realtor.com shows that the average down payment was 13.8% of the home's price, slightly lower than 14.7% in the same period in 2022.

This suggests a growing challenge in meeting the 20% down payment, commonly seen as a benchmark to avoid private mortgage insurance (PMI).

According to the report by Freddie Mac (OTC:FMCC), typically PMI expenses amount to approximately $30 to $70 per month for every $100,000 borrowed. 

In examining the top 15 priciest markets, it's evident that California cities are at the forefront with the highest median down payments.

Also Read: A Family Left The U.S. And Bought A 400-Year-Old Apartment In Portugal For Just $534,000

Here are 15 real estate markets determined by the median cost of a standard down payment on a home. Although the national average for down payments is 13.8% of the home price, these figures will differ in each market.

1. 1. San Jose-Sunnyvale-Santa Clara, California: $235,183
2. 2. San Francisco-Oakland-Berkeley, California: $202,575
3. 3. Santa Maria-Santa Barbara, California: $160,750
4. 4. Los Angeles-Long Beach-Anaheim, California: $152,275
5. 5. Santa Rosa-Petaluma, California: $147,550
6. 6. Oxnard-Thousand Oaks-Ventura, California: $142,800
7. 7. Seattle-Tacoma-Bellevue, Washington: $123,630
8. 8. San Diego-Chula Vista-Carlsbad, California: $119,917
9. 9. Boston-Cambridge-Newton, Massachusetts-New Hampshire: $108,658
10. 10. Fort Collins, Colorado: $105,533
11. 11. Sacramento-Roseville-Folsom, California: $104,159
12. 12. Naples-Marco Island, Florida: $98,357
13. 13. New York-Newark-Jersey City, New York-New Jersey-Pennsylvania: $97,319
14. 14. Portland-Vancouver-Hillsboro, Oregon-Washington: $82,667
15. 15. Bridgeport-Stamford-Norwalk, Connecticut: $82,667

In contrast, areas like Killeen, Texas, are seeing much lower median down payments, attributed to the prevalence of 0% down mortgages provided by the U.S. Department of Veterans Affairs and no down payment loans from the U.S. Department of Agriculture, the report said. 

Companies like Redfin Corp. (NASDAQ:RDFN) and Zillow Group, Inc. have been at the forefront of the real estate market, offering innovative solutions and platforms for buyers and sellers.

In comparison, Anywhere Real Estate Inc. (NYSE:HOUS) and RE/MAX Holdings, Inc. (NYSE:RMAX) have leveraged their vast networks and established brand names to maintain a significant market share. 

Investors looking to gain exposure to the real estate sector can consider ETFs such as iShares U.S. Real Estate ETF 

and Real Estate Select Sector SPDR Fund.

These ETFs provide a diversified exposure to the industry, capturing the performance of both traditional and tech-driven real estate companies.

Now Read: Here's Why Housing Prices Could Fall By 20% In 183 Cities Across US, Including Boise, Charlotte And Austin

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock

Posted In: FMCC HOUS RDFN RMAX