On Tuesday, RealtyTrac released a new report covering purchase loan and sales data for single-family homes and condominium, revealing that consumers who bought a home last year paid an average down payment of 14 percent, or about $32,141.
In all, the RealtyTrac’s report covered close to 1.5 million purchase loans in 386 counties, but there was more to the statistics than the above mentioned numbers. According to RealtyTrac vice president Daren Blomquist, first-time home buyers are best advised to shop around in low-priced markets, not only due to lower pricing, but because of lower down payment percentages – in these markets, consumers paid only 12 percent down on average, as opposed to 24 percent down in premium markets. “Meanwhile, the markets where millennials are moving the most have above-average down payment percentages, which will make it tough for millennial renters to convert into first-time homebuyers in those markets,” he added.
However, Blomquist enumerated a few markets wherein there is a perfect storm of sorts brewing in the real estate market – he describes this as a “combination of an influx of millennials and relatively low average down payment percentages.” The markets he mentioned include Nashville, Tenn., Durham, N.C., Philadelphia, Des Moines, Ia., Little Rock, Ark., and Columbus, Ohio.
The bifurcation between down payments in low-priced markets and high-priced market was very evident in the RealtyTrac report. In the 25 counties with the lowest median home prices at the end of the previous calendar year, consumers paid 12 percent down on average, with the average down payment in dollars at $8,239. But in the 25 counties with the highest median home pricing, consumers paid an average down payment of 24 percent, with the average dollar amount at approximately $138,547. Further, low down payment loans took up 25 percent of all purchases in the lowest-priced counties, and only 7 percent of all purchases in the most premium.
Going forward, a number of real estate professionals agree that 2015 may be the year in which millennials rejoin the housing market en masse and take advantage of their low down payment opportunities. “The pendulum has swung back to a strong lending environment,” said Keyes Company CEO Michael Pappas in a statement quoted by RealtyTrac. “As the millennials continue to move into the market and the investors diminish we will see the number of low down payment loans increase.”
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