People in New York City looking to buy their first home may find they need to save for a significantly long period, perhaps even decades, before they can move in.
According to a recent analysis by Rocket, NYC stands out as the hardest major market for first-time buyers to gather enough for a down payment. A typical household would take around 65.2 years to save the required funds.
The analysis also found that the average down payment for these buyers in the city is about $265,000, which is 30% of the median home purchase price of $883,333.
This figure puts New York ahead of even some notoriously high-priced California markets.
For instance, in San Francisco, an average household needs about 57.2 years to save up a median down payment of $400,000, which is roughly 27% of a $1.5 million purchase.
Los Angeles ranks third, with residents needing about 41.5 years to raise their median down payment of $170,500 on an $852,500 home. Following that, Boston comes in at 37.8 years, where first-time buyers typically contribute $185,000. In California cities like Anaheim and San Jose, it’s a bit easier, as both require around 33.6 years, with down payments averaging $249,000 for San Jose on a home costing about $1.1 million.
This calculation assumes a household saves 5% of its income annually. Rocket utilized household income data from the 2024 Census alongside down payment information from its mortgage customers within the previous year.
However, the eye-opening 65-year statistic isn’t representative of how long New Yorkers actually save; it highlights the significant gap between their income and what first-time buyers typically pay for homes in the city.
In the analysis, the median household income in New York was about $81,228, which means saving 5% a year would yield just over $4,000 annually.
Things look quite different a few hundred miles away, though.
In Warren, Michigan, for instance, a typical first-time buyer puts down merely $8,797, or about 5% of the $175,940 purchase price, allowing a household to save for that down payment in only 3.1 years.
Detroit follows closely, where a median down payment of $7,600 reflects a similar 5% on a $152,000 home, which takes about 3.9 years to save.
Virginia Beach and Fort Worth tie at 4.3 years, while Indianapolis and Milwaukee are around 4.4 years. The stark difference isn’t just about coast versus inland prices; people in pricier markets are often putting down a larger percentage of the home cost.
In New York, first-timers contribute a median of 30%, which is six times what buyers in Detroit and Warren are paying.
One possible reason for this high entry point could be New York’s demanding co-op market, where properties often require a down payment of 20% to 30%, as noted by Redfin agent Jason Warner.
Warner commented on how the high price points in NYC have transformed the demographic of first-time buyers, saying that he now often assists mid-career professionals in their late 30s and early 40s looking to own a home after years of renting.
Apart from the financial strain, having a substantial down payment can also bolster an offer in a competitive market where inventory is limited. A strong down payment can signal to sellers that an offer is serious.
This research comes amid a broader challenge faced by first-time buyers nationwide, who are grappling with affordability issues.
In March, the average U.S. homebuyer contributed $64,000, which is about 15% of the home price, according to a separate Redfin analysis. This figure has nearly doubled since before the pandemic, largely spurred by rising home prices.
Even with some recent improvements in affordability, many American households still earn significantly less than what’s needed to comfortably purchase a home.
Redfin estimated that a household would require around $109,800 annually to afford a typical U.S. home, juxtaposed with an estimated median household income of about $87,600.
For New Yorkers, the challenge is even greater: the income needed to buy a typical home in the metro is roughly $233,000, while the median household income sits around $98,000.
For potential buyers who can’t afford to wait decades, enlisting family support has become increasingly common. Rocket’s analysis pointed out that nearly 25% of younger recent homebuyers have tapped into family funds for their down payment.
Others are broadening their search areas or adjusting their expectations. But those who are determined to remain in New York can see just how much cash it takes to even get started on buying their first home.
