Down Payments Stifling Future Homeowners

The American dream of buying your own home seems to be the impossible dream for many first home buyers. A new report released last week says the Federal Reserve reveals that most American renters would prefer to own their own home but feel they cannot afford to do so. One of the major stumbling blocks is the amount of down payment required.

A summary entitled “Report on the Economic Well-Being of U.S., households in 2014,” shows that 61 percent of Americans who answered the survey own their home, six in 10 of them have a mortgage, with an average monthly payment of $1,344. Those statistics must apply to people who’ve had their own home for some time. People who are new in high cost urban areas such as San Francisco, Silicon Valley, Los Angeles, and New York City, could not possibly buy a home with a mortgage as low as $1344 per month.

To report has a lot of useful information. 28 percent of people are renters. The average monthly payment is $808. There are very few urban areas with rents as low as that. Back around 1996, the rent for a one bedroom apartment in central San Francisco was around $2300 per month The only people who were paying less than that had been in the same apartment for years, under rent control, or those still living at home with their parents.

10 percent of people surveyed neither own a home nor pay rent. They must be the college graduates living in mom and dad’s or a very good friend’s basement.

first home

Looking at the 81 percent of renters who said they would prefer to own their home, most of them, 50 percent, say the down payment is their biggest hurdle to purchasing their own home. The other 31 percent said they cannot even qualify for a mortgage at all.

What is most shocking in the report is that it says there are people with incomes over $100,000 who are renters, who say they continue to rent because of their personal preferences, such as it being more convenient. Of this highly paid group, 39% said it was more convenient for them, another 29% said they may be moving soon and 17% said that they simply prefer to rent.

The report also told us why people choose to own rather than rent. 44% of homeowners said they can build equity. 41% said it costs them less to own rather than rent. 20% want the certainty provided by monthly payments.

So it seems that not many of these reasons have changed in the minds of people who own their own home. Except for one thing. Some people are still suffering from the mortgage crisis. 14% of home owners with a mortgage say they still owe more to the bank than their home is worth.

The federal government tried to correct that, but has obviously not succeeded, at least not for those 14%.

Dwight L. Schwab Jr. is a moderate conservative who looks at all sides of a story, then speaks his mind. He has written more than 3500 national political and foreign affairs columns. His BS in journalism from the University of Oregon, with minors in political science and American history stands him in good stead for his writing.


Dwight has 30-years in the publishing industry, including ABC/Cap Cities and International Thomson. His first book, “Redistribution of Common Sense – Selective Commentaries on the Obama Administration 2009-2014,” was published in July, 2014. “The Game Changer – America’s Most Stunning Presidential Election in History,” was published in April 2017.


Dwight is a native of Portland, Oregon, and now a resident of the San Francisco Bay Area.