Saving for a home is tough, especially in a competitive (and expensive) market like Los Angeles. Putting away enough money to make a hefty downpayment requires discipline and firmly established goals. That’s why Realtor.com has released a handy new guide to saving in the nation’s 15 largest cities.
The site has calculated exactly how much aspiring homeowners should be squirreling away each day to save for a downpayment in their respective towns. The calculations are based on median home prices and the average percentage buyers put down in those areas. The real estate website also figured out how many Caramel Macchiatos you’d need to skip each day to reach that saving goal.
So, how much do LA homebuyers need to avoid Starbucks? Quite a bit. Realtor.com found that an average downpayment in the city is 18.3 percent of the sale price. With median home prices hovering around $678,000, that’s a savings goal of $124,074. Over five years, that’s $67.95 per day. Over 10 years, it’s $33.97 each and every day.
So, if you happen to consume eight Macchiatos a day, you’re in luck; all you’ll need to do to afford a downpayment is cut that expense out of your budget for the next decade. Everyone else, get more creative.
Realtor and TV host Michael Corbett tells Realtor.com prospective homeowners should consider putting tax refunds and annual bonuses toward a future downpayment. Of course, given that saving goals in LA amount to nearly $25,000 annually for five years, buyers will probably have to look for plenty of other income sources as well.
Simply put, buying in LA remains difficult to completely out of reach for many of the city’s residents. If there’s any consolation, it’s that things are even worse in San Francisco. There, homebuyers must set aside an astonishing $104.46 per day over a five year period to save for a massive $190,750 downpayment. Yeesh.