Many members of the Millennial [born between 1981 and 1996] and Gen Z [born in 1997 and onward] generations were forced to move home because they lost their jobs in 2020. In addition, others chose to forgo their rental because they had the opportunity to work remotely and preferred to wait out the pandemic with family. Of course, the silver lining for the “move back home with family approach” is that saving for a down payment is much more feasible if the would-be rent is channeled to savings.
Although most young professionals may not like hearing this, moving back home with family members can truly accelerate savings for a down payment on a home. As a matter of fact, the national median for a down payment on a house in December 2020 was 5%. Therefore, depending on the median home price in a market, one can determine approximately how long it will take to save for a 5% down payment.
For example, the median monthly rent in Miami in 2020 is $1,691 and the median listing price is $409,000. Therefore, it would take 12 months for a prospective home buyer to save $20,450 for a down payment.
Recent college graduates and young professionals are certainly encountering a challenging economy. To add to these challenges, home prices continue to rise higher than wage growth while housing inventory remains tight at best. It is with these reasons in mind that moving back in with family members and saving would-be rent money for home savings can be a great idea. For those that opt to go this route, it can be an eye opening and financially rewarding experience. In many cases, it may only take a year or so for a substantial down payment on a home to be accumulated.
Are you a first-time home buyer? If so, there are various financing programs that you may take advantage of as well. At Live South Florida Realty, Inc. we have assisted many first-time home buyers realize their dream of home ownership. Contact Live South Florida Realty, Inc. today!