The COVID-19 pandemic has forced countless changes in every sector, and the home shopping environment is no exception. For some first-time homebuyers, many of whom had to move back into the family home during the crisis, there could be a silver lining, according to a study by realtor.com.
Returning home for a period of time, rent-free, could mean a real opportunity to save for a down payment on a home.
Saving for a down payment is one of the biggest barriers to homeownership, according to a press release from realtor.com. "For the record number of young adults who moved back home during the pandemic fortunate to still have a job, homeownership may be more attainable than they think."
For someone paying the U.S. median one-bedroom rent of $1,533, it would take 11 months to save $17,000, a 5% down payment for a $340,000 home, the median-priced home in the U.S., according to realtor.com's analysis of listing and rental data for the U.S. and the nation's 20 largest metros in December 2020.
"Although many members of the millennial and Gen Z generations were forced to move home because they lost their jobs in 2020, others chose to forgo their rental because they had the opportunity to work remotely and preferred to wait out the pandemic with family," said realtor.com Chief Economist Danielle Hale. "For those who have been able to channel their would-be rent into savings, the pandemic's silver lining could be becoming a homeowner sooner than they otherwise would have."
At a local level, in Chicago, for example, based on the median rent for a one-bedroom apartment of $1,521, it would take 11 months to save $16,350, a 5% down payment on the median list price home of $327,000. At the opposite end of the spectrum, in Los Angeles, where the median list price for a home is just under $1 million and the median one-bedroom rent is $2,250, it would take 22 months to save for a 5% down payment of $50,000.