In recent years, surveys from the National Association of Realtors and Zillow have found that saving for a down payment is the most significant hurdle for renters who want to own a home. But how long does it take for renters to accomplish this goal? The answer depends on a lot of factors, especially the city in which they live.
A study by SmartAsset discovered how many years it would take for the average worker in metro Chicago to save up for a down payment. The study ranked the top 25 cities where potential homebuyers have to save up the longest.
The ranking was assembled by looking at the median home value compared to the median household income in each city. Assuming that potential homebuyers saved 20 percent of their annual income, SmartAsset found the annual savings per household and estimated the cost of a down payment.
The study showed that California buyers have to save the longest, with four of the top five and six of the top 10 cities located in the state. On the other end of the spectrum, Texans require the least time to save, with cities like Fort Worth and El Paso requiring only a few years of saving to afford a down payment.
Chicago is ranked No. 19 on the list, with an average of 4.6 years of savings required to afford a down payment. The median home value in Chicago is $243,900, and the median household income is $53,006.
“While you should probably start saving for your down payment long before you are buying your home, it is a good idea to know how much home you can afford. This will then give you an idea of how much to save for your down payment,” the study noted.