Down Payments Slip as Buyers Hold Tight to Cash

• June 2nd

by UrbanTurf Staff

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Homebuyers are putting less money down than they did a year ago, according to a new report. 

The typical U.S. homebuyer put down $64,000 in March, a 1.5% decline from a year earlier, the new Redfin report found. In percentage terms, the typical down payment came in at 15% of the purchase price, down from 16.1% the prior year. 

Several forces are driving the trend. Homebuyers are making smaller down payments due to cooling home-price growth, a rise in lower-down-payment loan products, and less pressure to compete in bidding wars. 

The geographic spread is wide. Down payment percentages were highest in three California metros — San Jose, San Francisco, and Anaheim — where the typical buyer put down 25% of the purchase price. At the other end of the spectrum, Virginia Beach came in at just 2%, with Detroit at 5% and Las Vegas at 6%. In the DC region, the median down payment is about 10%.

Despite the year-over-year dip, the broader context is one of historically elevated down payments. While down payments have fallen from their peak, they remain well above pre-pandemic levels — in dollar terms, they have essentially doubled since 2019, largely because home prices have increased so much. In percentage terms, the typical down payment hovered around 10% for many years before the pandemic before jumping during the homebuying frenzy and staying somewhat elevated since.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/down_payments_slip_as_buyers_hold_tight_to_cash/24690.