Saving for a Starter Home Now Takes Twice as Long
By Emma Carter
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Intro
Buying a first home has become harder for many renters in the United States. A new analysis says the time needed to save for the first costs of a home has doubled since 2019.
Vocabulary
| Word | Part of speech | Meaning | Example |
|---|---|---|---|
| household noun | noun | Meaning: all the people living together in one home | Example: Our household saves money by cooking at home. |
| inflation noun | noun | Meaning: a general rise in prices over time | Example: Inflation has made food and transportation more expensive. |
| required adjective | adjective | Meaning: needed because of a rule or condition | Example: A passport is required for international travel. |
| pace noun | noun | Meaning: the speed at which something happens or changes | Example: Her savings did not grow at the same pace as prices. |
| timeline noun | noun | Meaning: the amount of time planned or expected for something | Example: The project timeline gives us two months to finish the work. |
The story
Buying a first home is taking much longer for many renters in the United States. A new analysis from the Center for Responsible Lending says a median-income renter household now needs about 16 years to save enough for a down payment and closing costs on a starter home.
That is twice as long as the time estimated in 2019. The analysis was released by the center’s Julian Bond Institute. It looks at households with middle incomes, including many people who might normally be considered possible future homeowners.
The calculation uses a 3.5% down payment, the amount required by the Federal Housing Administration for first-time buyers. Closing costs are the extra fees paid when a home loan is completed. These can include charges for services connected to the purchase.
The analysis points to several reasons for the longer wait. Home prices have risen, while inflation has increased the cost of everyday needs such as food, gas and health care. Home loan closing costs have also increased, partly because homeowners insurance has become more expensive. At the same time, renters’ incomes have not kept pace, and personal savings rates have fallen.
The wait can be even longer for some groups. A median-income Black renter household may need 21 years to save the required amount. For middle-income households overall, the estimate is 12 years. Front-line workers, including nurses, teachers, firefighters and emergency medical workers, may need 10 to 13 years.
The report says this long timeline can change the meaning of buying a first home, especially for families saving while their children grow up.
Warm-up questions
- What costs might someone need to save for before buying a home?
- Why might buying a first home take longer today than in the past?
Comprehension questions
- How many years does the analysis say a median-income renter household needs to save?
- How does the current estimate compare with the 2019 estimate?
- What does the 3.5% down payment represent?
- Why have some home loan closing costs increased?
- Which group may need 21 years to save the required amount?
Opinion questions
- Do you think sixteen years is too long to save for a first home? Why?
- Which cost in the article would be hardest for renters to manage?
Further discussion
- How might a long wait to buy a home affect families and children?
- What could governments or communities do to make starter homes easier to buy?
Writing prompt
- Write a short paragraph explaining why saving for a starter home has become harder.
