Get this: 3 million people move to cities every week, according to the International Organization for Migration. In the U.S., the Census Bureau estimates that roughly 80% of Americans live in urban areas. And it’s no mystery why: Metros are hopping with jobs, culture, haute cuisine, hot night life—in short, everything most human beings could need or desire.
The problem? If you ever plan to settle down in said city and buy a house, scrounging up the necessary down payment can be a freakishly daunting prospect: a vertiginous urban mountain to climb or worse, an unpassable barrier. It’s enough to convince some folks to stay renters forever, or flee to far greener pastures in the burbs or beyond, where you can buy a house—maybe even a really big one—for a fraction of the price.
But die-hard city dwellers shouldn’t give up on their home-buying pipe dreams quite yet.
Because a down payment doesn’t look half so intimidating if you break it up into smaller, bite-size amounts—like what you’d have to save daily to make your nut. Spread it out, and it’s surprising how quickly you can cut this fearsome sum down to size. As proof, the penny-pinching data nerds at realtor.com® crunched the numbers for America’s 11 largest real estate markets by population to figure out just how much buyers would need to save per day to realize their dreams of buying a home.
Here’s how we figured it out:
- We looked at the median home listing price in May for the 11 biggest U.S. metropolitan areas (which include the main city, plus surrounding towns) and the average percentage that buyers in those areas put down to buy a home. Note: While it’s ideal to have a solid 20% down payment to avoid extra fees, the actual median down payment hovers around 13%, according to the National Association of Realtors®. (It’s about half that for first-time home buyers, and those who qualify for an FHA loan need only a 3.5% down payment.) Using those numbers, we figured out the typical down payment for each city.
- We calculated how much potential buyers need to save each day to reach that amount over the span of five and 10 years. Because we’re not psychics (sorry!), we made the assumption that home prices and down payment percentages will stay the same as they were as of May 1, 2019.
- To keep those daily numbers from feeling too abstract, we added up how many tasty Starbucks Grande Lattes (which currently sell for $3.65 a pop) you’d need to forgo each day to reach your goal.
What’s that you say? Not a caffeine guzzler? Well, our classic coffee index is just a reference point. Find other things to do without on a daily or monthly basis, and do the math!
“Even small changes in your monthly budgets can help,” says Miron Lulic, founder and CEO of the personal finance site SuperMoney. “Work out at home instead of going to a gym [saving around $50 per month], switch your cable for Netflix [saving about $50 monthly], only eat out on special occasions [God only knows how much you’ll save]. Try to save at least 20% of your after-tax income, but any amount is better than nothing—even if it’s $20 per pay period.”
What else can you live without? A new cellphone? Weekly mani-pedi? Additions to your vintage Tamagotchi digital pet collection?
“The down payment is a key barrier for first-time home buyers, but the sooner you start saving and the more you sacrifice, the sooner you’ll have a home of your own,” says Danielle Hale, realtor.com’s chief economist. “Stash your money in a separate savings account so you don’t spend it, and you may be surprised how quickly it adds up.”
So read on for a home-brewed, caffeine-fueled trip across the U.S. to see just how much you’d need to save (or make!) per day to buy a house in America’s 11 biggest metros. Trust us, it’s not as bad as you might think.
1. New York
Median home price: $564,500
Average down payment percentage: 16.4% ($45,717 on a median-priced home)
Daily savings goal (over 5 years): $25.04
Daily savings goal (over 10 years): $12.52
The phrase “If you can make it here, you can make it anywhere” is apt if you hope to buy in the Big Apple. The median list price in the city’s bustling epicenter, Manhattan, is a cool $1.4 million, one of the highest in the nation. Worse, roughly 63% of listings in Manhattan are co-ops, where buyers own a share in a corporation (aka the building). While there are some that allow down payments as low as 10%, most require at least 20% down, if not more.
“Some of those ritzier white-glove buildings require 40% down,” says Grant Braswell, broker at The Braswell Team. “It’s a hidden way of allowing only certain people into a building.”
The good news is that New York’s metro area (and commuter trains) extends well into New Jersey, Connecticut, and even Pennsylvania, where prices are much less daunting. And there are areas within each of NYC’s other boroughs that are much more affordable.
So if you don’t mind a half-hour train ride into work, or to the museums and night life NYC is famous for, just venture farther afield. In hip, family-friendly Brooklyn, the median sale price is half that of Manhattan, at $580,000. Or try Long Island City, where this two-bedroom is listed for $615,000. Not too shabby for a skyline view!
2. Los Angeles
Median home price: $769,524
Average down payment percentage: 18.1% ($81,078 on a median-priced home)
Daily savings goal (5 years): $44.40
Daily savings goal (10 years): $22.20
Think you need a Leo DiCaprio–level salary to afford a home in the hills with an infinity pool and a view of the Hollywood sign? While it’s true that real estate bidding wars have plagued Tinseltown for the past few years, prices have been leveling off—and with wages here 17% higher than the national average, buyers have more cash to put toward a house.
Many of the best options for first-time buyers who want to spend less than seven figures and still be in the midst of the action are the slew of new condo buildings that have popped up in Hollywood. These abodes, which often come with balconies or other outdoor space to soak in Southern California’s nearly ever-present sun, can go for under $850,000 including this three-bedroom listed at $749,000.
3. Chicago
Median home price: $312,098
Average down payment percentage: 12.7% ($19,580 on a median-priced home)
Daily savings goal (5 years): $10.72
Daily savings goal (10 years): $5.36
The Second City boasts nearly all of the amenities of the First (New York, natch)—outstanding restaurants, theaters, museums, walkable neighborhoods—but the homes here go for nearly half the price. So, provided you don’t mind those frigid winter months in the Windy City, you could be looking at a bargain. But don’t dillydally: Chicago’s home sale prices have increased 9.8% since 2018.
Still, deals abound if you know where to look. Just a few blocks from the high-end shops and restaurants of Michigan Avenue and glittering Millennium Park, buyers can find nice-size, one-bedroom condos for under $200,000. Meanwhile, a short drive away from The Loop (the 35-block area that makes up downtown), buyers can snag a classic bungalow with a yard and white picket fence. Neighborhoods like Gage Park offer a nice mix of single-family homes and apartment buildings within a 20-minute drive to the city center, such as this palatial six-bedroom for just $269,000.
And thanks to a decent public transportation system, a car may not be required.
“Chicago is very convenient,” says Nick Libert, a real estate agent with Exit Strategy Realty.
4. Dallas
Median home price: $350,000
Average down payment percentage: 12.7% ($19,452 on a median-priced home)
Daily savings goal (5 years): $10.65
[visual: 2.9 lattes]
Daily savings goal (10 years): $5.33
There’s a whole lot more to Dallas than the Cowboys, big hair, and everyone’s favorite 1980s soap. The metro added nearly 30,000 jobs in the past year, and the population has grown 11.8% from July 2010 through July 2018, according to the U.S. Census Bureau. Massive companies like Toyota, Pizza Hut, and McKesson have been relocating from pricier cities, attracting a ton of talented employees from all over the U.S.
They come for the gigs, but there are plenty of other reasons to stay. Big D has evolved from its oil town roots; parts of the city, including neighborhoods like Bishop Arts, more closely resemble Austin or coastal California with its multicultural restaurants, third-wave coffee shops, cutting-edge art galleries, and live music venues.
“It feels like a real community that’s in the middle of all the action,” says broker Delisa Rose.
In the historic neighborhoods that sit between trendy Bishop Arts and upscale Kessler Park, buyers can find gorgeous Craftsman bungalows and wood-framed cottages that have been nicely renovated starting in the low $400,000 range.
5. Houston
Median home price: $324,925
Average down payment percentage: 11.7% ($14,420 on a median-priced home)
Daily savings goal (5 years): $7.90
Daily savings goal (10 years): $3.95
Houston is also diversifying from its good ol’ Texas oil boom days. But booming it still is: The city boasts lower unemployment (3.5%) than other major metros in the Lone Star State. And it’s expected to grow 3.84% every year for the next five years, according to the Perryman Group, with the most growth in mining and tech jobs.
In fact, there are plenty of things that people love about Space City these days.
“We have high-end restaurants and every type of culture, from Indian and Thai to Chinese, Japanese, and South African,” says Greg Nino, real estate agent with Re/Max Compass. “And the culture of the city is becoming more liberal.”
In East Downtown, affectionately dubbed EaDo, many young buyers have been snapping up older cottages starting at $120,000, but the up-and-coming neighborhood also offers a wide range of newly built single-family homes, like this three-bedroom, 3.5-bath beauty for under $400,000.
6. Philadelphia
Median home price: $288,950
Average down payment percentage: 12.8% ($20,798 on a median-priced home)
Daily savings goal (5 years): $11.39
Daily savings goal (10 years): $5.69
Between the Liberty Bell, Independence Hall, and those famous Philadelphia Museum of Art stairs Rocky climbed, Philly boasts some of the richest history in the United States. Like New York City, many of its old neighborhoods are lined with historic brownstones, but without the sky-high price.
While the City of Brotherly Love still has high levels of poverty in some areas, its local unemployment rate has dropped to levels not seen since 2000, according to the Pew Research, with 15,000 new jobs added from 2017 to 2018, mostly in the health and education sectors.
While there are plenty of deals to be found throughout Philly, one of the hottest neighborhoods is Fishtown. The former working-class enclave, which has recently been gentrified by the tatted-up and mustachioed crowd, boasts a range of two- to three-bedroom brick row homes in the $300,000s, like the newly renovated two-bedroom pictured below.
7. Washington, DC
Median home price: $462,450
Average down payment percentage: 11.5% ($25,700 on a median-priced home)
Daily savings goal (5 years): $14.07
Daily savings goal (10 years): $7.04
Ever since Amazon announced it would be opening its second headquarters in Crystal City, across the river in Washington, DC, homeowners have been holding on to their properties in anticipation of a surge in real estate values. Prices are expected to increase 20% to 25% over the next few years.
So if you’re hoping for a bargain in our nation’s capital, you’d better act quick! While one-bedroom condos in midcentury brick high-rises abound in the low $200,000s, those who prefer to retain a more urban way of life are flocking to DC’s Southwest Waterfront district. The evolving area, anchored around its marina and 19th-century Maine Avenue Fish Market, boasts a mix of midcentury condos and co-ops along with some new glass-covered apartment buildings starting in the low $300,000s.
8. Miami
Median home price: $399,000
Average down payment percentage: 13.3% ($19,831 on a median-priced home)
Daily savings goal (5 years): $10.86
Daily savings goal (10 years): $5.43
Miami’s international appeal has been driving up real estate prices for the past decade, with a high portion of wealthy foreign investors from all over South America and the Caribbean. While the city has a glut of million-plus-dollar condos on the market, starter homes are scarce. The city’s median home price is $73,200 above the national figure, but wages are $12,700 below the national median income of $59,039.
Those who want an entry-level home and don’t want to decamp farther north to Broward or Palm Beach counties can find fixer-uppers in Little Haiti in the $200,000 range, like this three-bedroom place. This neighborhood, filled with mostly Florida-style bungalows and ranches, lies on higher ground than much of the sea-level city. And that’s a good thing! While abodes near the beach are typically the priciest, global warming has made the coastline vulnerable to rising sea levels, so savvy home buyers are moving to higher elevations—a phenomenon known as “climate gentrification.”
9. Atlanta
Median home price: $335,436
Average down payment percentage: 9.5% ($10,450 on a median-priced home)
Daily savings goal (5 years): $5.72
Daily savings goal (10 years): $2.86
Hotlanta’s real estate market is living up to its nickname. With a slew of Fortune 500 firms (Coca-Cola, Home Depot, UPS) and low cost of living, the area has attracted Northerners. The population has grown 10.6% since 2010, which has been steadily nudging up home prices, but there are still plenty of deals. In fact, this city boasts some of the highest shares of listings priced under $200,000.
Savvy buyers have been seeking out “Intown” (Atlantan parlance for downtown) homes near the Beltline—a former railway corridor that circles the city that, by 2030, will be transformed into a path for trolley cars and 33 miles of biking and hiking trails. Prices in that area are taking off, but buyers can still score bargains on cute single-family bungalows like this three-bedroom for $219,000.
“Anything really close to Intown is starting to be gobbled up,” says Ryan Sconyers, a Realtor® with The Graham Seeby Group. “Everyone is looking to walk or bike to work.”
10. Boston
Median home price: $594,450
Average down payment percentage: 16.9% ($61,367 on a median-priced home)
Daily savings goal (5 years): $33.61
Daily savings goal (10 years): $16.80
For the past few years, Boston’s drastically increasing home prices have been frustrating first-time buyers—no one would blame them if they chucked a bunch of Starbucks dark roast into the harbor. But while Beantown is not exactly what anyone would call cheap—in fact, prices are at record highs—the number of homes listed for sale has been growing exponentially, creating a market that’s more buyer-friendly than you might think.
For young buyers, the former working-class hub of South Boston has been one of the hottest neighborhoods for quite some time, filled with a mix of historic brick and wood-sided row homes. Most one-bedroom condos are priced in the $500,000 to $700,00 range, but it’s still possible to find an affordable place like this small one-bedroom in a Colonial-style row home.
11. San Francisco
Median home price: $954,000
Average down payment percentage: 21.7% ($171,836 on a median-priced home)
Daily savings goal (5 years): $94.11
Daily savings goal (10 years): $47.05
High stock markets, low interest rates, and a spring full of long-anticipated IPOs had everyone worrying that the United States’ most expensive real estate market would get even more unreachable for those who haven’t created a Google-level startup.
But it turns out the stock market debuts of Uber, Lyft, Pinterest, and Slack—tallied together at a whopping $120 billion—didn’t exactly create the “home-pocalypse” everyone feared. Home prices in San Francisco did reach record highs, up 5% from the same period last year, but the entry-level market didn’t see much of a change.
“It seems the IPO effect was in higher price ranges,” says Patrick Carlisle, chief market analyst at San Francisco Bay Area Compass.
The San Francisco Association of Realtors reported that in San Francisco’s city proper, the median single-family home price crept up just 1.2%, to $1.65 million, in May compared with the previous year. And condo prices have fallen 0.7% over that same time period, to $1.2 million.
On the lower end of this high-end market, buyers can find two-bedroom, single-family homes in styles that range from classic Victorians to Edwardians starting just around $1 million in the southern part of the city in neighborhoods like Portola and Sunset District, including this three-bedroom in Excelsior. Meanwhile, an 850-square-foot, one-bedroom condo in a detail-rich converted Edwardian can start as low as $899,000 in centrally located South of Market.
Still, even with the ever so slight reprieve, you might as well keep that coffee habit going if you’re hoping to buy a home in San Francisco. Who knows? Maybe that buzz will help you mastermind the next big startup—like something to solve all of our down payment frustrations, perhaps?
