The top cities where renters could save the fastest for a first home

With the housing market not performing as many potential buyers had hoped and mortgage rates rising much faster than expected, a recent RentCafe survey sees a light at the end of the tunnel.

Downsizing a single bedroom could help renters save an average of $3,735 a year, the survey found. To dig deeper, the apartment search website found the top 50 cities where it would take renters two to five years to save 10% on a first home by downsizing.

These days, the rental market is hot and the dream of home ownership is slipping away for many. RentCafe analyzed 200 cities to determine where renters can save for a down payment the fastest, just by downsizing a room.

  • One in three renters would trade a small apartment for a better chance of home ownership. This would save them about $3,735 on average per year. These amounts, as well as house prices, differ from city to city, and therefore saving for a down payment may be faster in some places than others.
  • Chicago takes the honorable mention as the fourth city where tenants can save by downsizing because it takes two years and three months to do so.
  • New York stands out as one of the few major cities where downsizing can help tenants save significant amounts of money. Giving up a room here saves you over $20,000 a year, which in turn can be set aside for a 10% down payment over 2 years and 7 months. However, giving up space might be more difficult for tenants in New York than for tenants in other cities with more generous apartments.

Renters who are willing to compromise on space could save an average of $3,735 per year, nationally, which is quite significant, especially in today’s economy. Essentially, that equates to an average of six years and seven months to save enough for a down payment on a first home.

In particular, tenants in Dayton, Ohio are closest to the property. Here, the median price of first homes – combined with the savings from reducing their rental – would allow them to afford a down payment in just one year and nine months.

And speaking of savings, you wouldn’t believe how much New Yorkers could save per year if they compromised and gave up a room — a whopping $20,000, the biggest annual savings among the cities analyzed. Whether that justifies downsizing in New York City is up to tenants to decide.

Here are the top 10 cities where renters could save the fastest for a down payment by simply downsizing their apartment. In some cases, this strategy could help turn tenants into owners in less than two years.

1.Dayton, Ohio

  • Savings time for a down payment: 1 year, 9 months
  • Median first-time home price: $57,652
  • Down payment value: $5,765
  • Savings per year after downsizing: $3,168

2. Philadelphia

  • Savings time for a down payment: 1 year, 10 months
  • Median first home price: $142,288
  • Down payment value: $14,229
  • Savings per year after downsizing: $7,416

3. Jackson, Mississippi

Nothing says Southern hospitality like affordable housing and home ownership that is a reality rather than a distant dream. And, for tenants in Jackson, Mississippi, saving for a down payment on their first home can be done in exactly two years. With a median starting price of just $36,413 and, therefore, a more than decent down payment value, Jackson residents can easily become homeowners in the state capital. The city is also known for its strong service industry, which provides stable jobs for its residents.

  • Savings time for a down payment: 2 years
  • Median first-time home price: $36,413
  • Deposit value: $3,641
  • Savings per year after downsizing: $1,800

4. Chicago

Chicago is not only the third largest city in the United States, but also a highly coveted place, and not just because of its unique architecture and deep pizzas. Renters here could save $8,916 a year if they gave up a room, meaning they could pay a first-home down payment in two years and three months. Granted, the median price of these homes is much higher than the top three locations on our list, but the income Chicago residents earn here makes saving for a down payment almost as feasible as in Jackson, Mississippi.

  • Savings time for a down payment: 2 years, 3 months
  • Median first home price: $201,848
  • Down payment value: $20,185
  • Savings per year after downsizing: $8,916

5. Tuscaloosa, Alabama

While Tuscaloosa is best known for housing the University of Alabama, it is also known for its low cost of living and affordable housing. In fact, this Southern gem competes with Chicago on how long it would take renters to save for a first-home down payment if they downsized by one bedroom: Saving $5,292 a year, Tuscaloosa renters could afford the 10% down payment for a first home at the median price of $122,221 in two years and three months.

  • Savings time for a down payment: 2 years, 3 months
  • Median first home price: $122,221
  • Down payment value: $12,222
  • Savings per year after downsizing: $5,292

6. Detroit

Detroit is another top location for renters to access homeownership by downsizing their apartment. Although it only saves an annual amount of $1,956, the low median starting home price of $45,478 makes the transition relatively quick. Just like in Chicago and Tuscaloosa, renters in Detroit could save for a down payment in just two years and three months.

  • Savings time for a down payment: 2 years, 3 months
  • Median first home price: $45,478
  • Down payment value: $4,548
  • Savings per year after downsizing: $1,956

7. Birmingham, Alabama

  • Savings time for a down payment: 2 years, 6 months
  • Median first home price: $55,125
  • Deposit value: $5,513
  • Savings per year after downsizing: $2,172

8. New York

  • Savings time for a down payment: 2 years, 7 months
  • Median first-time home price: $531,117
  • Deposit value: $53,112
  • Savings per year after downsizing: $20,148

About Harold Shirley

Check Also

Head-to-head review between Hancock Whitney (NASDAQ:HWC) and Citizens Financial Group (NYSE:CFG)

Hancock Whitney (NASDAQ:HWC – Get Rating) and Citizens Financial Group (NYSE:CFG – Get Rating) are …