Homebuyers Face ‘Record High’ Down Payments Under Biden-Harris Administration
The Biden-Harris administration has seen a significant rise in the amount of money homebuyers are required to put down for new homes, reaching a “record high,” primarily due to steep interest rates driven by inflationary monetary and economic policies.
In an Aug. 28 news release, real estate brokerage Redfin revealed that “the typical down payment for U.S. homebuyers hit a record high of $67,500 in June, up 14.8 percent from $58,788 a year earlier.”
For 12 consecutive months, year-over-year down payment costs have been on the rise, as highlighted in a report by The Epoch Times.
These increasing down payments are exacerbating the ongoing affordability crisis in the housing market during the Biden-Harris years. According to the National Association of Realtors (NAR), the monthly payments needed to afford a median-priced single-family home surged to $2,303 in June. This figure is nearly double the $1,206 monthly payment required in 2021.
Currently, monthly payments consume more than a quarter of an individual's income. To afford a median-priced home, one would now need an income of $110,544, compared to the $57,888 required when then-President Donald Trump left office.
A major factor contributing to the higher cost of home loans is the sharp increase in mortgage rates, which have risen from 3.01 percent to seven percent. However, rates have slightly declined from their peak in late October. As of the week ending August 29, the average rate for a 30-year fixed mortgage was 6.35 percent. It’s important to note that the Federal Reserve began raising rates in an effort to control the rampant inflation seen under Biden-Harris and during two years of full Democrat control of Congress.
Redfin attributed the rise in down payments to current market conditions, where “higher-priced, turnkey homes” in desirable neighborhoods are more likely to sell. Turnkey homes are fully renovated properties ready for immediate rental by investors.
The median price of a U.S. home has reached a “record” high of $442,525. Due to high home prices and mortgage rates, buyers are being forced to make larger down payments, according to the outlet.
“Investors are still coming in with all-cash offers on homes that need to be renovated. Traditional buyers are putting up large down payments to try and lower their mortgage payment,” said Annie Foushee, a Redfin agent in Denver. “These buyers often rely on family members to contribute more than they could afford on their own.”
In June, homebuyers typically made down payments equal to 18.6% of the home price, the highest level in over a decade. Nearly 60% of buyers put down more than 10% of the property price that month, as reported by The Epoch Times.
Over 30 percent of home purchases in June were made with all-cash, an increase from the previous year. Redfin Senior Economist Sheharyar Bokhari explained that the “percentage of all-cash sales generally follows the same trend as the rise and fall of mortgage rates. When rates are down, the percentage of all-cash sales is down too, and the opposite is true when rates go up.”
Bokhari added, “That means we may start to see all-cash purchases level off a little now that mortgage rates have started to come down from recent highs.”
According to real estate data provider ATTOM, Barnstable Town, Massachusetts, had the highest median down payment percentage among U.S. metros in the first quarter of this year, at 23.6%. Other areas with down payment rates above 23% include Naples-Immokalee-Marco Island, Florida, and San Francisco-Oakland-Hayward, California. Additionally, Los Angeles-Long Beach-Anaheim, California; Boulder, Colorado; Santa Rosa, California; and Oxnard-Thousand Oaks-Ventura, California also reported down payment percentages exceeding 20%, the outlet reported.