You’re probably used to hearing that Bay Area home prices are insane, unfair, punishing to potential buyers.
But here’s a new way to look at the dilemma faced by the region’s homebuyers:
The median 20 percent down payment on a house in metro San Jose is $192,320. Give or take a few bucks, that sum is equal to the median value of an entire house in the United States: $192,500.
Those numbers come from a new analysis of the national home market by Zillow, an online real estate database company.
Here’s another way to break down the burden of home buying in the Bay Area:
The average buyer in the San Jose metro area (which includes Santa Clara and San Benito counties) must set aside 182 percent of his or her annual income to assemble the recommended 20 percent down payment. The median income in the metro area is $105,455; the median 20 percent down payment is $192,320, as stated; and the median home value is $961,600, according to Zillow.
In the San Francisco metro area (which includes San Mateo, Alameda, Contra Costa and Marin counties), the situation is similar. The average buyer must set aside 180 percent of annual income to come up with 20 percent down. The median income is $91,777; the median 20 percent down payment is $164,920; and the median home value is $824,600.
Compare that to the nation as a whole: The average American homebuyer has to set aside the equivalent of two-thirds of his or her annual income to make that 20 percent down payment.
Where do buyers put aside the smallest share of income? In Pittsburgh, Indianapolis and Kansas City, where 48 percent of annual income covers a 20 percent down payment.
Zillow also reports that 25 percent of first-time homebuyers in the U.S. rely on gifts from family and friends to gather enough funds to buy a house. And the report finds that saving for a down payment is the biggest worry of a fifth of all buyers.
“Saving enough cash for a down payment is a major barrier to home ownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” said Jeremy Wacksman, Zillow’s chief marketing officer. “While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”
Much of the down-payment analysis is derived from the Zillow Group Report on Consumer Housing Trends, which can be found right here. (Income figures come from the U.S. Census, while Zillow has taken median home values from its own Zillow Home Value Index.)
