Missing ingredient for millennials: Down payment savings

(AP Photo/Lynne Sladky)

WASHINGTON (AP) – Their savings are low, and their debts are high. And as a result, many of America’s millennials are struggling to afford their first homes — amid sharply higher prices.

Surveys show that most Americans under 35 don’t have enough savings for down payments.

Steadily rising home values in recent years have eclipsed pay increases. And that’s made it especially difficult to buy in major growth areas for jobs such as San Francisco, Denver and Seattle.

According to a survey released today, 37 percent of millennial renters around the country have saved nothing at all for a down payment. The survey comes from Apartment List — a company specializing in rental home searches. At the same time, 79 percent of millennial renters say they aspire to own a home.

In larger metro areas, millennial renters who are saving have put aside an average of just $5,830. This marks less than one-fifth the savings needed for the typical 20 percent down payment on a starter home costing $175,000.

One possibility- already seen in some markets- is that first-time buyers are making smaller down payments and paying mortgage insurance or slightly higher interest rates on mortgages.

Excess housing debt roughly a decade ago inflated a housing bubble and then triggered a market crash.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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