The housing market in the U.S. is climbing to new heights, but the experiences of home buyers are taking an unexpected turn in terms of down payment trends.
Down Payment Dilemma: Realtor.com’s study revealed a decrease in overall down payment percentages in 2023 compared to the previous year.
Despite the national decrease, specific areas, particularly in California, are witnessing homebuyers making obscenely hefty down payments, often surpassing an outrageous $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 situation creates a grueling challenge in meeting the 20% down payment, which is commonly seen as a measure to avoid private mortgage insurance (PMI).
According to a report by Freddie Mac FMCC, PMI expenses typically amount to approximately $30 to $70 per month for every $100,000 borrowed.
Taking a closer look at the top 15 exorbitant markets, it’s evident that California cities are at the forefront with the most outrageous median down payments.
The report also highlights areas like Killeen, Texas, where much lower median down payments are the norm, 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.
Real estate companies like Redfin Corp. RDFN and Zillow Group, Inc. have been blazing a trail in the real estate market by offering innovative solutions and platforms for buyers and sellers.
On a different note, Anywhere Real Estate Inc. HOUS and RE/MAX Holdings, Inc. RMAX have leveraged their vast networks and established brand names to maintain a significant market share.
For investors seeking real estate exposure, ETF options such as iShares U.S. Real Estate ETF
and Real Estate Select Sector SPDR Fund offer a diversified exposure to the industry, capturing the performance of both traditional and tech-driven real estate companies.
On the Contrary:
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.