One of the many effects of the pandemic was that a large segment of the population transitioned to work-from-home. In some cases, those were renters who had the fortune of being able to move back in with their families. Perhaps their rental home was closer to work, and the distance no longer mattered. Maybe they just wanted to be able to shelter in place with their family as opposed to alone. No matter the reason, this segment of the population suddenly is no longer worried about rent payments, yet still has a place to live and is still working. Depending on the prices in their area, this could be rather useful in saving towards a down payment on a house.
The national average of a down payment on a median-priced house is 5%, the US median rent for a one-bedroom is $1,533, and the average home price is $340,000. Given these numbers, it would take the average former renter approximately 11 months of not needing to pay rent to save up for a 5% down payment. Across the 20 largest metros in the US, the average is about 15 months. The numbers range from 11 months in Chicago for a median priced home of $327,000, to 22 months in Los Angeles at $999,000.
Of course, national averages don’t tell you everything. A down payment of less than 20% in California is going to result in increased mortgage premiums, so a 5% down payment isn’t ideal. It’s also unlikely that the entirety of the former rent payment is being put into savings. It’s true that a long-term work-from-home trend could be a boon for former renters who moved back in with family, but the effect is probably considerably lower than these statistics suggest.
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