Prices of homes have surged in the past year. Among the reasons are historically low mortgage rates, new mobility brought on by the COVID-19 pandemic and the desire of people to move from extremely expensive cities to ones that are less costly. Additionally, some people believe that smaller cities, primarily away from the large coastal cities like Los Angeles and New York, have a better quality of life.
This mobility has contributed to the rise in home prices. The carefully followed S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index shows that in August, home prices nationally rose 19.8% compared to the same month a year ago. Among the top 20 markets, the largest surge was in Phoenix, where prices rose 33%.
Among the primary costs of buying a new home is the down payment. This can range from well over 20% to below 5% of the cost. Realtor.com recently released its “10 Cities Where You’ll Need the Biggest Down Payment To Snag a Home—and 10 Where You’ll Put Down the Least” report. Down payment data came from the largest 300 metros, measured by research company Optimal Blue, and were from August.
The explosion of the real estate market has made down payments a tool for buyers. According to Realtor.com Chief Economist Danielle Hale: “In competitive markets, having a high down payment can help your offer stand out. Sellers like them because they’re more likely to go through to closing.”
As a rule of thumb, markets that require the lowest down payments on a percentage basis have relatively low median home prices, measured against the national figure in September of $380,000.
In Fayetteville, North Carolina, the average down payment was 3.7% against a home price of $204,950. Alexandria, Louisiana, and Wheeling, West Virginia, with 5.1% average down payments.
These 10 cities require the lowest down payments:
|City||Avg down payment||Median list price|
|Terre Haute, Ind.||6.9%||$126,400|