If you and/or your clients have a child or grandchild born between 1995-2012 whose goal it is to be a homeowner by age 30, the best advice you can give her/him is to start saving for that home NOW.
How much does that Gen Z child or grandchild need to be saving? $304/month, according to realtor.com, for 144 deposits over 12 years.
A median priced home is expected to cost $265,000 nationwide in 2019 but, over the next 12 years, prices are expected to rise 46% to $386,310 (assuming a modest +3.2% y/y increase) by Moody’s Analytics.
Realtor.com also projects that the cost of a national median priced home will be $386,310 in 2031, the year when today’s 18-year-old will turn 30, according to an analysis of mortgage data done by Optimal Blue. Obviously, median priced homes in different locations will have different median prices and different monthly savings requirements. Take a look:
- in San Jose, a Gen Zer will need to save $1,962/month.
- in San Francisco, a Gen Zer will need to save $1,439/month.
- in Los Angeles, a Gen Zer will need to save $979/month.
- In Honolulu, a Gen Zer will need to save $946/month.
- In Oxnard CA, a Gen Zer will need to save $877/month.
Zillow projects that Gen Zers would need to save $1,645/month starting now in order to make a 20% down payment and closing costs for a home in the ten most expensive metros in the country.
On the other hand, with an average median home price of $191,381 for the top ten most affordable metros in the country, Zillow projects a Gen Zer would need to save an average of $150/month to afford a 10% down payment on a home by the time they become 30. Take a look at these easier savings plans for home opportunities in the Midwest and South:
- Youngstown OH – $108/month
- McAllen TX – $111/month
- Toledo OH – $141/month
- Wichita KS – $154/month
- Little Rock AK – $156/month
Wherever Gen Zers who want to live in their own home choose to live, “The most important thing they can do is start saving as much as possible early on…” said Danielle Hale, realtor.com’s chief economist, “…and let compound interest do the heavy lifting for them.”