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Real Estate & Housing

Saving for Down Payment Continues as Major Hurdle to Homeownership

Alex Lofton | 16 Jul 2021

At Landed, we think a lot about ways to make homeownership accessible to more people, especially those who don’t have access to the “bank of mom and dad” to help out with the ever illusive down payment on a dream home. This is often the case for our communities of color. As rent prices continue to soar across the country, the ability to stash money away to save for a down payment on a new home is out of reach for most.

As Zillow reported last week, saving for a down payment has gotten even harder in recent years. According to Zillow’s study, it would take the average renter saving 10% of their income (a high bar) six years and five months to save up for a 20% down payment on a starter home. In most markets where Landed operates, the study’s findings offer an even grimmer picture:
- Los Angeles: 17.6 years
- San Francisco: 17.4 years
- Boston: 13 years
- Portland: 12.7 years
- Denver: 12.5 years
- Seattle: 12.2 years
- Washington, DC: 9.3 years

Landed was founded to help solve this very problem for essential professionals – the educators, health care workers and government employees – who uphold our communities every day. It shouldn’t be so hard for these families to buy a home near where they work.

We’ve helped more than 700 essential employees access homeownership through our shared equity down payment program and other homebuying services. More than half of Landed’s customers are first-time homebuyers, who as the Zillow report points out can benefit from current lower interest rates keeping monthly payments low even with a smaller down payment. While the Zillow study mentions the shift to more remote work allowing people to buy in more affordable markets, most essential professionals Landed serves are very much tied to the cities where their classrooms, hospitals and emergencies are located.

Research demonstrates that the shared equity model holds great potential for expanding access to homeownership and that the main barrier to realizing its potential lies in lack of consistent funding. Our fund is bolstered by philanthropic impact investors who share our mission of upholding those community members who uphold us, making our model scalable. Landed's down payment program invests alongside employees working in education, government, and healthcare to help them reach a 20% down payment. Our funds come in the form of an equity investment, meaning that homebuyers share a portion of the gain – or loss, if any – of the value of the home once the partnership is ended — typically by sale or refinance.

While the new Zillow report can make the problem we set out to help solve seem insurmountable, it’s a reminder that it’s going to take all of us – the public, private and nonprofit sectors – coming together with creative solutions. For the team at Landed, we’re motivated in our work by our homebuyer customers’ stories like Jacqueline and Javier, Cliff and James and Valerie and Brian and look forward to continuing to help others make the dream of homeownership a reality.

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About the Author

Alex Lofton

Alex Lofton is a co-founder of Landed. Origin: the Pacific Northwest. Proud product of Bellevue Public Schools. Believes that valuing Black lives isn't zero-sum. Decompression methods: time outdoors, playing the ‘funcle’ (fun-uncle) role, and the dance floor.

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