Nearly 3 in 5 homebuyers put down more than 10%
of the purchase price, one of the highest shares on record
(NASDAQ: RDFN) — The typical down payment for U.S. homebuyers
hit a record high of $67,500 in June, up 14.8% from $58,788 a year
earlier, according to a new report from Redfin (redfin.com), the
technology-powered real estate brokerage. This was the 12th
consecutive month the median down payment rose year over year.
The nearly-15% jump in the median down payment significantly
outpaced the increase in home prices, which were up 4% in June year
over year. The increase is being influenced by the current market,
where higher-priced, turnkey homes in desirable neighborhoods are
more likely to sell. It’s also partly due to buyers putting down a
higher percentage of the purchase price as a down payment.
“Investors are still coming in with all-cash offers on homes
that need to be renovated. Traditional buyers are putting down
large down payments to try and lower their mortgage payment,” said
Annie Foushee, a Redfin agent in Denver. “These buyers will often
utilize the help of family members to put down more than they could
on their own.”
The typical homebuyer’s down payment was 18.6% of the purchase
price in June, the highest level in over a decade and up from 15% a
year earlier.
Nearly three in five (59.4%) homebuyers put down more than 10%
of the purchase price in June, up from 56.6% a year earlier.
Down payments are increasing for a number of reasons:
- Rising home prices: The median-priced U.S. home was a
record $442,525 in June, up 4% year over year. Higher home prices
naturally lead to a higher down payment, which is a percentage of
the home price.
- Elevated mortgage rates: Homebuyers are incentivized to
put down more money upfront, and borrow less, when mortgage rates
are higher. The 6.92% average mortgage rate in June was among the
highest in the past 20 years, pushing buyers to increase their down
payment to minimize monthly payments.
- Buyers have more equity: With home prices up, people who
sell their previous property for more than they purchased it can
use the extra equity for a larger down payment on their new
home.
All-cash purchases make up nearly a third of home
sales
The percentage of U.S. home purchases made with all cash rose to
30.7% in June, up slightly from 30.4% a year ago.
“The percentage of all-cash sales generally follows the same
trend as the rise and fall of mortgage rates. When rates are down,
the percentage of all-cash sales is down too, and the opposite is
true when rates go up,” said Redfin Senior Economist Sheharyar
Bokhari. “That means we may start to see all-cash purchases level
off a little now that mortgage rates have started to come down from
recent highs.”
FHA loans fall to lowest level in nearly two years
FHA loans made up 13.7% of mortgaged U.S. home sales in June,
the smallest share since August 2022 and down from 14.9% a year
earlier. FHA loans have declined because home prices are at
near-record highs and mortgage rates are still elevated, meaning
fewer relevant buyers are able to afford a home.
VA loans made up 6.7% of all mortgaged home sales, down slightly
from 6.9% a year earlier.
Conventional loans—the most common type—represented nearly four
out of every five loans (79.5%) in June, up slightly from 78.2% a
year ago. Jumbo loans—used for higher loan amounts and popular
among luxury buyers—represented 6.6% of mortgaged sales,
essentially unchanged from 6.5% a year earlier.
Metro-Level Highlights: June 2024
Metros with biggest increases/decreases in down payments, in
dollars
In Newark, NJ, the median down payment jumped 51.5% to $125,000
from $82,500 a year ago 51.5%—the largest percentage increase among
the metros Redfin analyzed. Next came Las Vegas (up 40.7% from
$32,328 to $45,500), Washington, D.C. (up 38.7% from $54,800 to
$76,000), New Brunswick, NJ (up 32.7% from $93,625 to $124,213) and
Nashville, TN (up 32% from $46,500 to $61,395).
Down payments only fell in three metros: Jacksonville, FL (down
28.4% from $39,950 to $28,338), Oakland, CA ( down 11% from
$219,000 to $195,000) and Tampa, FL (down 6.4% from $42,500 to
$39,773).
Metros with highest/lowest down payments, in
percentages
In San Francisco, the median down payment was equal to 25.8% of
the purchase price—the highest among the metros Redfin analyzed. It
was followed by San Jose, CA (25.7%) and Anaheim, CA (25%). Down
payment percentages are typically higher in San Francisco’s Bay
Area due to a higher-concentration of wealthy residents who can
afford to put a higher percentage of the purchase price down.
Down payment percentages were lowest in Virginia Beach, FL
(3%)—an area with a higher concentration of veterans using VA loans
with little to no down payment—followed by Detroit (6.8%), and
Jacksonville, FL (8.6%).
Metros where all-cash purchases are most/least common
In West Palm Beach, FL, 50.4% of home purchases were made in
cash—the highest share among the metros Redfin analyzed—followed by
Riverside, CA (39.9%) and Detroit (38.9%). All three metros see
strong investor activity.
All-cash purchases were least common in San Jose, CA (18.3%),
Seattle (21%) and Oakland (21.2%)—three more expensive metros where
the median-priced home tops $850,000.
Metros with biggest increases/decreases in share of all-cash
purchases
In Pittsburgh, PA, 28.6% of home purchases were made in cash, up
from 19.2% a year earlier—the largest increase among the metros
Redfin analyzed. Next came New Brunswick, NJ (up from 31.1% to
36.8%) and Newark, NJ (up from 25.9% to 31.6%).
In Providence, RI, 23.1% of home purchases were made in cash,
down from 33.5% a year earlier—the lowest increase among the metros
Redfin analyzed. Next came Baltimore (down from 36.1% to 26.8%) and
Jacksonville, FL (down from 44.2% to 38.1%).
To view the full report, including charts, methodology and
additional metro-level data please visit:
https://www.redfin.com/news/all-cash-homebuyers-june-2024
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20240828874430/en/
Redfin Journalist Services: Kenneth Applewhaite
press@redfin.com
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