(JustPatriots.com)- Down payments on homes dropped over the last few years as competition slowed down and demand for properties declined, according to The Daily Wire. In January 2023, the median down payment for a home was estimated at $42,375, or around 10% of the price of the home.
The new figure marks a decline from the 13.6% recorded in January 2022 and down 17.5% in May 2022. Sheharyar Bokhari, a senior economist at Redfin, said that the slowed competition means that home buyers can purchase a home without going into a bidding war and handing a large amount of their savings to the seller to get their attention. Sellers are now even offering buyers financial concessions like paying for closing costs or the mortgage-rate buydown.
Mortgage rates have risen in recent months, according to CNBC. So to create a consumer, both sellers and lenders have been offering buydowns and discount points, which are usually signs that lenders are “desperate,” according to Gordon Miller, president of North Carolina-based Miller Lending Group.
The rising costs of home prices and down payments skyrocketed over the past three years because competition also rose, The Daily Wire reported. A shortage of labor force participation and supply chain bottlenecks in 2020 put properties in demand as the construction of new homes dropped. But the trend began to start in 2019 when there was a shortage of around 3.8 million properties.
While down payments have reportedly fallen 35%, they are still at a 30% high before the recession of 2020. The falling payments are also a result of inflation, which reached a 40-year high under the Biden administration. As home buyers’ savings are depleted and mortgage rates increase, down payments have spurred in the opposite direction all across the country.
Sacramento, California, Orlando, Florida, and Atlanta, Georgia have seen some of the lowest payments in the last year, while Newark, New Jersey, and San Francisco, California clocked in higher.