Prospective homebuyers setting a savings goal may have to move the  post even further as prices are expected to rise sharply in 2018.

According to a new report from Zillow, the precipitous rise in down payments needed to purchase a home will accompany the uptick in sales prices.

Across the United States, the median home value is expected to rise from $202,700 in September 2017 to $208,975 in September 2018, a 3.1 percent increase. If the goal is to put the standard 20 percent down on a home, then that means the average future homebuyer will need to save  an extra $105 per month, and a total of about $3482 per month for a year!

In hotter housing markets like Seattle, a 5.2 percent expected increase in home values means that prospective buyers would need to save an extra $394 per month, versus someone who purchased a home this year.

The increase is bad news for first-time homebuyers, many of whom find the down payment to be the biggest hurdle to clear before purchasing their first home. According to Zillow Group’s Consumer Housing Trends Report 2017, more than 59 percent of first-time homebuyers put down less than 20 percent.

“Sky-high rents and rising home prices are putting first-time buyers in a bit of a catch-22,” said Dr. Svenja Gudell, Zillow’s chief economist, in a statement. “Buying now with a low down payment can be riskier, and the offer may not be considered as competitive by the seller.”

According to the report, individuals putting down an initial 20 percent averaged just 1.9 total offers before winning their house, compared to 2.4 for buyers with lower down payments.

“However, a renter who saves for another year to reach a larger down payment may find that the home they love today is outside their budget a year from now,” Gudell added. “For those considering buying in the next year, getting into the market today may make more financial sense than they think.”

Zillow offers prospective buyers an affordability calculator to see how much they can actually afford to spend on a home. The number is based on their income, debt and savings. The site’s mortgage calculator can also provide custom down payment estimates based on home price and interest rates.

Email Inman

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription