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Down Payments Are Shrinking, but Not in These Pricey Metros

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House Review

Down Payments Are Shrinking, but Not in These Pricey Metros

The typical down payment is 10% smaller than it was a year ago, but buyers in these costly metros are still dishing out the big bucks for home purchases


March 23, 2023
House stacked on money in front of piggy bank
Image: Andy Dean / stock.adobe.com

The typical U.S. homebuyer made a $42,375 down payment in January, the smallest typical down payment recorded in nearly two years, according to HousingWire. Though January’s typical down payment was still up 30% compared with pre-pandemic levels, it was 35% below the high recorded in June 2022.

Of the 40 metros tracked by Redfin, San Francisco was home to the highest down payment percentage of 25%, followed by Anaheim and San Jose, in California. Meanwhile, Sacramento, Calif., posted the largest year-over-year decline in down payment percentage, posting 12.4% in January 2023 compared with 20% one year prior.

“One silver lining of high mortgage rates and economic turmoil is that they’ve slowed competition,” Sheharyar Bokhari, Redfin’s senior economist, said in a statement. “That means buyers are often able to purchase a home without facing a bidding war and don’t need to fork over a huge portion of their savings for a down payment to grab sellers’ attention. Today’s buyers are also able to save money in other ways: Nearly half of sellers are offering concessions, like helping pay for a mortgage-rate buydown or covering closing costs, to attract buyers.”  

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