curious study by Consumer Affairs<\/a> that looked into a major challenge for first-time homebuyers: the down payment.<\/p>\nThe report pondered how long it would take to save 10% of the median purchase price, a common goal for first-timers, assuming the wannabe owner saved 10% of income left over after paying taxes and life\u2019s \u201cessentials,\u201d using the median household income.<\/p>\n
Of course, the California \u201caffordability\u201d numbers were ugly.<\/p>\n
For starters, the Golden State has the highest down-payment goal: $83,200 vs. a median of $38,750 across the 50 states. After California came Hawaii at $74,400, and Massachusetts at $63,900.<\/p>\n
As for California\u2019s big rivals, Texas ranked No. 31 at $33,900, and Florida ranked No. 22 at $40,400. The U.S. lows were found in West Virginia at $24,000 and Iowa at $24,700.<\/p>\n
However, Golden State paychecks are generous. That makes the potential monetary pie from which to save \u2013 income minus tax and core costs \u2013 sizable in California at $33,200 of the leftover income?. That\u2019s No. 11 among the states and 19% above the 50-state median of $27,900.<\/p>\n
Maryland had the highest excess income at $42,600, followed by Utah at $41,500. Texas was No. 12 at $33,000, and Florida was No. 38 at $24,500. Lows? West Virginia at $17,100 and Louisiana at $18,500.<\/p>\n
Quarter-century work<\/p>\n
This is the painful part. If a Californian saved 10% of that excess income for the down payment, it would take 25 years to reach the down payment goal.<\/p>\n
Yes, a quarter-century. It\u2019s 11 years longer than the nation\u2019s 14 years.<\/p>\n
That\u2019s the longest in the nation, ahead of No. 2 Montana at 24 years, No. 3 New York at 23, and No. 12 Florida at 16.5. Lows? Iowa at 8.7 years, Ohio at 9.9, and Maryland and Texas at 10.3.<\/p>\n
And while \u201cCalifornians need 25 years to save a down payment\u201d is a great headline, it\u2019s more a frustrating statistic than any helpful guide.<\/p>\n
Steep savings goal<\/p>\n
To determine the slice of excess income required to be saved to meet the down-payment goal in five years, the spreadsheet recalculated the same data. And to speed the process, I assumed those savings would earn 3% a year.<\/p>\n
For a Californian to accomplish this lofty financial feat, this math says $18,200 a year must be saved. That\u2019s the highest burden among the states and more than double the median of $8,500 across the 50 states.<\/p>\n
Next was Hawaii at $16,200 and Massachusetts at $14,000. Lows? West Virginia at $5,200, then Iowa at $5,400. Texas was No. 31 at $7,400, and Florida was No. 22 at $8,800.<\/p>\n
Can it be done?<\/p>\n
Is this savings target do-able, California?<\/p>\n
Well, that requires the typical wannabe California owner to stash away 55% of all spare cash after paying for taxes and basic needs for five consecutive years to build a nest egg equal to a 10% down payment.<\/p>\n
Ouch! More than half.<\/p>\n
That\u2019s the largest share nationally and is nearly double the 30% median of the states. Next comes Montana at 53% and New York at 50%. Florida was No. 12 at 36%.<\/p>\n
Where is it easiest to build a down payment? This math says Iowa requires 19% of excess income saved, Ohio\u2019s at 22%, and Texas is 22%.<\/p>\n
It\u2019s yet another example of brutally overpriced housing in California. And that means many Californians need a generous relative or two to cover their down payment.<\/p>\n
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Want to enter the world of California homeownership? Become a voracious saver. My trusty spreadsheet had some fun…\n","protected":false},"author":2,"featured_media":76815,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[387,7,100,388,74,76,75],"class_list":{"0":"post-76814","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-san-diego","8":"tag-business","9":"tag-california","10":"tag-news","11":"tag-real-estate","12":"tag-san-diego","13":"tag-san-diego-headlines","14":"tag-san-diego-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/76814","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=76814"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/76814\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/76815"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=76814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=76814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=76814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}