Homebuying is the American dream, however many walk into it without knowing the full weight of the financial decision they are about to make. The first year of homeownership alone is burdensome to many new homeowners as they face the additional costs of their purchase. Where can homebuyers look to shop to be able to afford these costs with minimal debt?
Point2’s latest report took a look at the 100 largest markets to determine the costs associated with the first year of homeownership, focusing on two types of expenses: Upfront costs (such as down payment and closing costs) and annual recurring costs (such as mortgage payments, insurance and taxes).
The report then analyzed the number of years it would take to cover the full cost of the first year of homeownership (by saving for that amount of time, or by paying off costs progressively through the years via loans, etc).
Here are the top 5 cities with the fewest years required to cover the cost of the first year of homeownership:
- Detroit, Michigan at 4.3 years
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- Total first year costs: $25,110
- Average upfront costs: $17,583
- Average recurring costs: $7,527
- Median income: $28,986
2. Toledo, Ohio at 6.5 years
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- Total first year costs: $38,008
- Average upfront costs: $26,862
- Average recurring costs: $11,146
- Median income: $29,387
3. Cleveland, Ohio at 6.7 years
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- Total first year costs: $38,569
- Average upfront costs: $26,852
- Average recurring costs: $11,717
- Media income: $28,743
4. Fort Wayne, Indiana at 7.6 years
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- Total first year costs: $59,779
- Average upfront costs: $43,554
- Average recurring costs: $16,225
- Median income: $39,474
5. Indianapolis, Indiana at 8.3
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- Total first year costs: $73,148
- Average upfront costs: $53,066
- Average recurring costs: $20,082
- Median income: $44,221
Major takeaway:
“For most Americans, the homebuying journey is daunting in and of itself—without even thinking about the expenses that follow once they check that milestone off their list,” said Alexandra Ciuntu, a creative writer for Point2 and author of the report. “And, with the national down payment averaging $85,100, homeownership-related costs risk breaking the bank even before considering recurring mortgage payments, homeowners’ insurance, and property taxes. Still, the cost of that first year as an owner is a beast of its own that cannot be ignored—particularly in the big city.”
For the full report, click here.
