Down payments are at a record high: Here's where buyers pay the most

(NewsNation) — Homebuyers are putting down much wealth than ever to soften the stroke of high owe rates, and successful immoderate cities, $400,000 down payments are present the norm.

The emblematic down outgo for U.S. homebuyers deed a grounds $67,500 successful June, astir 15% higher than a twelvemonth earlier, according to a caller Redfin analysis. That leap importantly outpaced the emergence successful location prices, which went up 4% twelvemonth implicit year.

In respective California cities, buyers are putting down overmuch more. San Jose ($451,500) and San Francisco ($441,500) had the highest median down payments successful the country. Anaheim ($300,000) ranked third, and Oakland ($195,000) ranked sixth.

Down payments are besides higher successful percent terms, reaching astir 19% of the acquisition terms successful June. That's up from 15% a twelvemonth agone and the highest level successful implicit a decade, Redfin found.

Elevated owe rates are driving the trend. By putting down much wealth upfront, buyers tin little their monthly payments. At 6.92%, June's average owe rate was adjacent a 20-year high, and the emblematic monthly owe outgo was $2,785.

Rising location prices are different crushed buyers are putting much wealth down. Part of that is due to the fact that homeowners are sitting connected much equity, truthful erstwhile they sell, they person much wealth for their adjacent down payment, Redfin noted.

In immoderate markets, investors proceed to play a relation successful driving up prices, often making all-cash offers to debar paying interest.

It's nary coincidence that buyers successful the Bay Area enactment down a bigger stock of the acquisition price, 26%, than those successful each different metro — galore are competing with affluent residents and deep-pocketed investors.

"San Jose has a batch of overseas investors buying sight-unseen, and a batch of location flippers who are purchasing dilapidated homes, putting immoderate lipstick connected them, and selling them for a profit," Craig Pellegrini, a Redfin Premier real property cause successful San Jose, said successful a caller report.

In the 2nd 4th of 2024, existent property investors bought 1 successful 4 of the nation's astir affordable homes, Redfin found.

Meanwhile, the stock of location income backed by Federal Housing Administration (FHA) loans fell to 13.7% successful June, the lowest level since August 2022. Those loans are geared toward borrowers with little recognition scores and are much fashionable with first-time homebuyers.

The diminution is simply a motion that Americans are struggling to spend homes successful the existent market's cleanable tempest of precocious prices, elevated owe rates and debased inventory.

But determination are inactive pockets of affordability. In Virginia Beach, the emblematic down outgo was $9,195 successful June, the lowest of each the large metros successful the country. Redfin pointed retired that the country has a precocious attraction of veterans utilizing VA loans with small oregon nary down payment.

Detroit ($16,000) had the second-lowest median down payment, followed by Cleveland ($26,850) and Pittsburgh ($28,000). Five of the 10 cities with the lowest down payments were successful Ohio oregon Pennsylvania.

As for the metros with the highest down payments, California cities made up 7 of the apical ten. Seattle ($206,950), New York City ($199,775) and Newark, NJ ($125,000) besides made the list.

Redfin looked astatine region records crossed 40 of the astir populous U.S. metropolitan areas successful its analysis.

The 10 U.S. cities with the highest median down payments, according to Redfin: