The amount of money homebuyers are being asked to put down on their purchases of new homes has reached a “record high” under the Biden-Harris administration, thanks largely to dramatically higher interest rates resulting from inflationary monetary and economic policies.
“The typical down payment for U.S. homebuyers hit a record high of $67,500 in June, up 14.8 percent from $58,788 a year earlier,” according to an Aug. 28 news release from real estate brokerage Redfin.
Year-over-year down payment costs have been continuously increasing over the past months, with June marking the 12th consecutive month of rise, the report said, as noted by The Epoch Times.
Higher down payments are contributing to the ongoing affordability crisis in the housing market during the Biden-Harris administration. According to data from the National Association of Realtors (NAR), in June, the monthly payments required to afford a median-priced existing single-family home were $2,303. That is nearly double the $1,206 monthly payment needed in 2021.
Monthly payments now consume more than a quarter of an individual’s income. To qualify for a median-priced home, a person needs an income of $110,544, up from the $57,888 needed when then-President Donald Trump left office.
A significant factor driving up the cost of home loans is the rise in mortgage rates, which have surged from 3.01 percent to seven percent. Recently, however, rates have decreased from their peak in late October. As of the week ending August 29, the average rate for a 30-year fixed mortgage was 6.35 percent. It should be noted that the Federal Reserve began hiking rates as a means of taming what had become runaway inflation under Biden-Harris and two years of full Democrat control of Congress.
Redfin, meanwhile, noted that the increase in down payments is being driven by current market conditions, where “higher-priced, turnkey homes” in desirable neighborhoods are more likely to be sold. Turnkey homes are fully renovated properties that investors can purchase and rent out immediately.
The median price of a U.S. home reached a “record” high of $442,525. Due to elevated home prices and mortgage rates, buyers are required to make larger down payments, the outlet reported.
“Investors are still coming in with all-cash offers on homes that need to be renovated. Traditional buyers are putting up 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.”
In June, the typical down payment made by homebuyers was 18.6% of the home price, the highest level in over a decade. Nearly 60% of buyers paid more than 10% of the property price as a down payment that month, The Epoch Times continued.
More than 30 percent of home purchases in June were made all-cash, up from last year. Redfin Senior Economist Sheharyar Bokhari noted that 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.”
“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,” Bokhari added.
According to real estate data provider ATTOM, Barnstable Town, Massachusetts, had the highest median down payment percentage among U.S. metros in the first quarter of this year, at 23.6%. Other areas with down payment rates above 23% include Naples-Immokalee-Marco Island, Florida, and San Francisco-Oakland-Hayward, California. Additionally, Los Angeles-Long Beach-Anaheim, California; Boulder, Colorado; Santa Rosa, California; and Oxnard-Thousand Oaks-Ventura, California also reported down payment percentages exceeding 20%, the outlet said.
