Saving for a Down Payment Takes Pennsylvania Residents Over 3 Years

If you have clients looking to put down a 20% down payment, they should have been saving for the past three years.

A recent Mint.com report found that for Pennsylvania residents, it should take them, on average, 40 months to save for a 20% down payment, if they are putting 20% of their income into an account. The 2018 median income for Pennsylvania households was $60,905. Using the average house list price of $201,300 for 2020, buyers would have to save $40,260 to put 20% down.

However, Pennsylvania homebuyers’ amount to save is less than the national average. Across the U.S., the average time to save for a 20% down payment is 51 months, or a little over four years. The national average down payment of 20% is $54,145, nearly $14,000 more than the Pennsylvania average down payment.

“A home purchase is likely the largest investment any individual will make in their lifetime. Depending on where an individual lives, it can be much harder to save for a down payment than in other areas of the United States,” said Alicia Butera, CFP® for Intuit/Mint. “If you are an individual who is making below the average wage in the cities with the longest time to buy a home, you will be severely disadvantaged or will likely have to purchase in a less desirable area.”

In Hawaii and Washington, D.C., buyers would have to save for over 100 months, or more than eight years, to afford a 20% down payment, based on the average salary and a 20% down payment on the average list price. West Virginia and Oklahoma were the most affordable, with consumers being able to afford a 20% down payment on the average salary for the average-priced home in about 2.5 years.

“What I have often seen in practice as a CFP®, which is even more apparent now because of COVID and work from home, is that individuals who live in the high home price states often save up for a home purchase while working in these states, but then move and buy in a lower cost state where they can get a much better value for their savings,” added Butera.