U.S. renters looking to become first-time homebuyers are keeping their expectations low and their savings high.

The average time renters in the U.S. need to save up for a 20% down payment on a home has skyrocketed to 36 years, and it’s even longer here in California. The top four U.S. cities with the longest average time to save for a down payment are all in California, taking on average:

  • 73 years in San Diego;
  • 72 years in Los Angeles Metro Area;
  • 70 years in San Francisco, and
  • 52 years in Riverside, according to Zillow

It takes even longer for people of color to save up for a 20% down payment and this disparity can be seen between the White homeownership rate versus the rate of Black and Latinx homeownership. Black and Latinx renters often lack the foundation of generational financial support in the form of family loans and gifts or the option of tapping into retirement accounts and investments.

But what Black and Latinx renters do have is the opportunity to begin creating generational wealth with a fast and smart debt clearing and savings plan. There are also many online resources to learn more about how to clear debt quickly to start saving for a home.

To reach clients directly with information on saving up for a down payment, visit our FARM letters page. Renters come from a variety of socio-economic backgrounds, and — despite the overwhelming savings gap — first-time homeownership is not limited just to the wealthy.

Low- to mid-tier housing

Renters aren’t simply choosing to wait 36 years to buy a home. Insufficient residential construction has caused a major supply-and-demand imbalance. Renters are faced with high home prices, forced to continually save up additional funds to cover a down payment on a desirable home.

Further, the construction shortage for low- to middle- income earners has pushed home and rent prices well beyond income increases. First-time homebuyers here in California face fierce competition for low- and mid-tier housing. Some simply choose to migrate to areas where the price of land is lower. No surprise here for firsttuesday journal readers.

California legislators are working to address this housing crisis, but they need to do more to  increase housing inventory, especially in the low- and mid-tiers. Renters need housing now, not fifty years down the line. Loosening zoning rules, easing the land subdivision process for landowners, and relaxing local review regulations for large housing developments are just a few changes the state can implement to increase housing.

Until the imbalance is corrected, agents can expect homebuyers to continue to compete for housing. Even though the 2020 recession has ended, it’s effects still linger in a market that remains challenging for renters to enter and as a result, for agents to work in.

At stake is the livelihood of California real estate professionals. Without a healthy supply of new first-time homebuyers, clientele will dry up and agent’s incomes will suffer. But agents can make a difference simply by getting involved. Agents can attend local city council meetings or contact their local representatives to advocate for more housing. Representatives will move to make change when enough voters pressure them to reform.