A down payment needed to buy a home keeps rising

Young home buyers contribute much to the real estate sales than any other age group. However, faced with student loan debt, stagnant salaries, competition from speculative buyers and many other reasons, the American Dream is becoming a nightmare for many of them.



One of the biggest obstacles in the home buying market is the down payment. In 2013 it required more than $9,400 as down payment to buy a home in the cheapest segment of the housing market. It required only $6,000 to buy a similar home in 2007. Today the down payment is twice that was in 2001 to 2006. Compare this to zero down payment with 3.5 percent interest rate in the past. According to published reports the median down payment today is around 7.5 percent of the sale price of a home in the lowest price range. This is one reason why home sales market is in turmoil.

Lending requirements have also being tightened recently. First time home buyers account for more than 28 percent of previously owned home sales market. Even with lower interest rates, tightening lending requirements keep first time home buyers away from the real estate market.