Where Saving for a House Can Take 95 Years

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“If we want to maintain homeownership, we’ll have to do what we did after World War II: Build communities that are relatively affordable,” Kotkin says.

Saving for a down payment on one’s first home is a rite of passage in the United States, one that helps many realize what was and is seen as a part of the American dream. Millennials who witnessed their parents’ misfortune during the global recession of 2008 — many of whom suffered housing devaluations, or worse — are now contemplating the housing ladder themselves. But saving for a 20 percent down payment, the industry standard today, could take them much longer than it took earlier generations. It takes 14 years to save for a down payment in the U.S. — 27 years in major U.S. cities and a whopping 95 years in one part of Colorado.

Among major cities, Detroit, Wichita, Columbus, Kansas City, Indianapolis and Louisville offered the shortest paths to homeownership — with Detroit the quickest at just seven years, according to the report. These examples are part of a growing trend of rising housing costs that’s contributing to a population shift from California to states like Arizona.

“You’re either going to move or you’re never going to have a house,” says Joel Kotkin, a presidential fellow in urban futures at Chapman University.

Unison has a vested interest in the hardship of saving for down payments given its business model: It makes up the difference — up to 20 percent — of a consumer’s down payment while getting a percentage of any changes in the home’s worth at the time of sale. And other reports in recent years have pointed to far shorter saving times. The Down Payment Report of 2017, for example, noted that 43 percent of homebuyers saved for down payments for six months or less, while 32 percent of first-time buyers saved for more than two years. A great deal depends on how much of a person’s income can be squirreled away each month. And, of course, there’s the very worrying trend of buyers putting down lower and lower percentages — keeping in mind that low down-payment percentages topped out at 73 percent in 2009.

But whatever the savings model or goal, the growing percentage of severely cost-burdened renters and declining national homeownership rates are raising alarm bells nationwide. As fewer families can afford homes and must rent smaller spaces instead, Kotkin expects to see a decline in birth rates — citing countries like Japan — which could cause negative long-term ripple effects on the economy.

“If we want to maintain homeownership, we’ll have to do what we did after World War II: Build communities that are relatively affordable,” Kotkin says.

Historically, owning a house was among the most reliable ways for Americans to build long-term wealth — though notably, homeownership has never been distributed equally across racial and socioeconomic classes. As fewer people can afford to buy homes, opportunities to bolster intergenerational wealth — and enjoy short-term financial gains — disappear along with it.

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