I mean this is the definition of a strawman argument. Whether it's 10 or 20% down payment is not that significant. Even 5% is un-affordable.
The median sale price of a home was $347,000 last month (0). 5% down on that is $17,350, accounting for closing costs you're going to need around $24,000 in cash to purchase a home.
Which isn't all that much money, except if you consider that it's more than 1/3rd of the median family income (1) and nearly 3 times the median household savings balance (2).
The takeaway from these numbers should be that swathes of people cannot afford homes.
5% is not not 3x the median savings balance of families seriously trying to buy a home. That’s setting aside that lower income families tend to live near lower priced homes.
Lower down payments meaningfully increase access to real estate. It matters hugely to be able to accelerate purchase timing by years, or decades.
This reads a bit like "if you exclude all the people that can't afford a home, then the data suggests everyone can afford a home."
Of course lower down payments increase access to real estate. The problem is half of all Americans can't even afford closing costs, let alone a down payment.
Close-it’s saying that there is a group of Americans approaching a 3.5-5% down payment who are in economically similar situations to people without savings, the difference being their saving/spending priorities.
Appreciate the concession about the lower down payment mattering.
The median household savings account balance is not relevant to this discussion. Savings accounts are an anachronism, most people don’t have them regardless of how much money they have. By that standard of “savings”, I am flat broke.
The median household in the US has >$12,000 in cash that can be saved per year after all ordinary expenses, not even just necessary expenses, per government survey data. So your $24,000 is an easily achievable two years of savings for the median household.
if you can’t afford 5% you are so poor you should be living at home or in the streets. lmaoo go sell the computer you typed this on if you are really that poor off.
It looks like the flow of your idea is to examine a "typical" family, demonstrate that they can't easily afford a home, and rely on most real-world distributions being nice to conclude that many people can't easily afford homes.
Ignoring the conclusion for the moment, that kind of an argument shouldn't just take into account the median savings balance; the median family has one or more individuals age 35+ and $40k+ in home equity -- they can afford a home as evidenced by the fact that they already bought one, and that additional factor to net worth is sufficient to allow them to easily switch homes if desired.
The conclusion itself definitely seems true in many cases, but if families are willing to move and switch careers I'm not sure it's that big of a deal. In every city over 30k people I've visited I've been able to clear $25+/hr just delivering doordash, and many of those have nice 2-3 bedroom homes under $150k. I nearly bought a $180k triplex after a couple years as a lowly pizza driver, and the only reason I didn't become a landlord then and there is because my girlfriend at the time convinced me college would be a better investment (I don't know that it necessarily was, but looking at my current career trajectory I don't have any evidence to the contrary).
Home ownership still wouldn't be totally trivial per se (maybe taking up to 3-5yrs), but in the vast majority of circumstances I'd wager without further proof that the things holding people back from home ownership are stronger alternative preferences (particular careers, cities, ...), and a lack of knowledge about what opportunities are available.
The median sale price of a home was $347,000 last month (0). 5% down on that is $17,350, accounting for closing costs you're going to need around $24,000 in cash to purchase a home.
Which isn't all that much money, except if you consider that it's more than 1/3rd of the median family income (1) and nearly 3 times the median household savings balance (2).
The takeaway from these numbers should be that swathes of people cannot afford homes.
(0) https://fred.stlouisfed.org/series/MSPUS#
(1) https://www.census.gov/library/publications/2020/demo/p60-27...
(2) https://www.valuepenguin.com/banking/average-savings-account... (perhaps there is a better source for this).
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