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Where Down Payment Size Matters the Most and Least

By Marc Rapport – Nov 12, 2021 at 8:25AM

Key Points

  • Retirement markets dominate list of high down payment cities.
  • The bottom 10 in the list also have median listing prices far below national averages.
  • Stats like these can help inform an investor’s search and strategies.

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Retirement and other higher-dollar hot residential markets require the most money up front. Smaller, cooler markets, not so much.

All real estate is local, and there's no better gauge of what's going on -- at least to most homeowners -- than to look around your own neighborhood.

I know in my own subdivision in Columbia, South Carolina, my three-bedroom (four if you count the finished room over garage, or FROG in real estate lingo), 3.5-bath place we bought for about $175,000 just five years ago now has a Zestimate of about $250,000. And we're not in a super-heated market. OK, but not red hot like so many other places.

But how about that big neighborhood we all live in? Just how hot was the market this year nationwide? The National Association of Realtors says the median sales prices of single-family existing homes rose 22.9% year-over-year in 2Q21 to $357,900, with double-digit price gains recorded in 94% of all U.S. markets.

Two children running into their new home with two adults close behind.

Image source: Getty Images.

Uber-low interest rates and intense demand have been driving prices up hard since the pandemic came ashore, and while all those factors could well change -- and we especially hope the third one does soon -- one thing won't: Money talks.

And when it comes to being the winning bidder for that home of your dreams, a big down payment and solid proof of mortgage loan preapproval matters most if you're not in a position to write a check for the whole thing.

The top and bottom 10 for median down payment sizes

Realtor.com just took a look at which U.S. markets required the biggest and lowest down payments from prospective buyers, using August data from the country's 300 largest markets and then choosing one metro per state to provide geographic diversity.

Here are the 10 cities, in descending order, with the highest average down payments as of September data from Realtor.com. 

Note that they are heavy on retirement destinations -- where the newcomers are likely to have lots of existing equity and savings and years of planning behind them. The list also includes some of the nation's pricier and/or fastest growing markets in general, where cash deals and bidding wars are the most heavily reported.

Rank

City

Average Down Payment

Median Home List Price

1.

The Villages, Florida

27.1%

$366,950

2.

Santa Cruz, California

25%

$1.2 million

3.

Coeur d'Alene, Idaho

22.5%

$749,950

4.

Prescott, Arizona

21.4%

$569,750

5.

Kahului, Hawaii

20.7%

$1,149,000

6. (tie)

Boulder, Colorado

20.6%

$749,950

6. (tie)

Barnstable Town, Massachusetts

20.6%

$699,500

8.

Santa Fe, New Mexico

20.1%

$702,750

9.

Bend, Oregon

19.5%

$649,000

10.

Dallas, Texas

19.4%

$396,480

Source: Realtor.com 

And here are the 10 cities, in ascending order, with the lowest average down payments. As Realtor.com points out in its blog, none of these have median home list prices at all approaching that listings site's national median of $380,000 in September.

Less competition = lower prices = lower down payment. (It's also worth noting that none of them are anywhere near the 20% threshold typically needed to avoid the added expense of private mortgage insurance.) 

Rank

City

Average Down Payment

Median Home List Price

1.

Fayetteville, North Carolina

3.7%

$204,950

2. (tie)

Alexandria, Louisiana

5.1%

$170,500

2. (tie)

Wheeling, West Virginia

5.1%

$149,500

4.

Clarksville, Tennessee

5.7%

$310,000

5.

Albany, Georgia

6.3%

$148,250

6.

McAllen, Texas

6.4%

$264,900

7.

Springfield, Ohio

6.5%

$145,225

8. (tie)

Florence, South Carolina

6.9%

$219,200

8. (tie)

Terre Haute, Indiana

6.9%

$126,400

10.

Tupelo, Mississippi

7.2%

$235,000

Source: Realtor.com

There are many economic indicators that speak to the competitive nature of the homebuying business in any individual market. Down payment size is just one, but it's a good one to look at if you're an investor beginning a search near or far for markets in which to buy a rental, for instance, or a flip.

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