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Despite tough housing market conditions, homebuyers seem ready to purchase

Homebuyers are putting more money down than ever before, even though housing conditions are tough. According to, the median down payment amount grew 118% in the last four years to nearly $30,500 in the third quarter of 2023, from $13,937 in the third quarter of 2019.

Moreover, the surge can be partly attributed to rapidly rising home prices during the pandemic. The U.S. median home price increased by nearly 40% to $373,253 in the third quarter from $266,861 in the same period in 2019.

Home purchase down payment reached 10-year high

Source: Yahoo Finance

The average percentage of deposit as a share of home price also grew. Since 2013, the average annual share of down payment was 11.39%, but that number climbed after the start of COVID to 12.75% and hit 14.71% in the third quarter, suggesting buyers are starting their homeownership with more equity in hand.

There are a few reasons for this trend. One reason is that home prices have been rising rapidly in recent years. This has made it more difficult for homebuyers to save up for a down payment. However, many homebuyers are still determined to buy a home, even if they have to put down more money.

Another reason for the trend is that homebuyers are facing more competition in the housing market. In order to make their offers more competitive, homebuyers are putting down larger down payments.

Finally, some homebuyers are putting down more money to avoid paying private mortgage insurance (PMI). PMI is an insurance policy that protects lenders in case the borrower defaults on their mortgage. However, PMI can be expensive, so some homebuyers are willing to put down a larger down payment to avoid paying it.

Homebuyers who can come up with enough cash to purchase in today’s market are not your traditional buyers. The majority of them are repeat buyers with carryover equity, higher-income households, or ones with access to large down payment.

The number of first-time buyers has shrunk below historical averages, hitting 26% last year—an all-time low. In August, first-time buyers made up only 29% of all sales, well below the long-term average.

While putting down a larger down payment can be difficult, it has many benefits. For one, it can lower your monthly mortgage payments. Additionally, it can give you more equity in your home from the start. This can be helpful if you decide to sell your home in the future.

If you are considering buying a home, it is important to factor in the cost of the down payment. You should also consider your financial situation and comfort level when deciding how much money to put down.


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