Oct. 26, 2023 By Ethan Marshall
It takes the typical homebuyer in New York state more than eight years to save for a deposit on a house, putting the state in fourth place in terms of the length of time needed to build a nest egg for a house, according to a study released by SelfStorage.com.
New York ranked behind Massachusetts, Montana and Hawaii in terms of the amount of time needed to raise a 10% deposit, based on the cost of living and incomes in each respective state.
SelfStorage.com conducted the study by determining the median household income of renters and fair market rent costs from each state’s National Low Income Housing Coalition (NLIHC). Using the so-called 50/30/20 rule (50% on needs, 30% on wants and 20% on savings), the research firm then calculated the time it would take for residents in each state to save for a 10% deposit.
The results of the study determined that it takes residents of New York state 8.66 years to save a 10% deposit after rent. Meanwhile, it takes 9.62 years in Massachusetts, 9.56 years in Montana and 9.4 in Hawaii. The state where it takes homebuyers the least amount of time is Ohio at 3.79 years.
New York’s median home listing price in 2022 was determined to be $596,500, requiring a 10% deposit of $59,650. The median monthly net income of households who rent was $4,953.
For two-bedroom homes, the median net income after rent was calculated at $2,869. The 50/30/20 rule was then used to determine the amount for needs, wants and savings. Based on the median income, the amount for needs was determined to be $1,435. Wants were calculated at $861. Savings were $574.
SelfStorage.com Content Manager Al Harris said that there are many variables in each state that play a role in how much time it takes to build up a deposit.
“The time it takes to save for a house deposit in each U.S. state varies significantly, reflecting the diverse economic landscapes across the country,” Harris said in a statement. “In states with higher living costs like Massachusetts, Montana, Hawaii or New York, the duration to save for a deposit can stretch to almost a decade, making homeownership a daunting prospect for many. Regardless, the prospect of one day owning a home is a landmark in one’s life that does push people forward and makes them willing to make all the manageable sacrifices it takes.”