REAL ESTATE TOPICS...Saving for a down payment? Hope you've got a few decades to spare

Imagine you’re a first-time homebuyer in California, trying to save up for a standard 20% down payment so you can buy your dream home. How long are you prepared to save to build up that down payment?

If your answer was anything less than 37 years, you might want to consider moving.

Thirty-seven. Years.

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That’s how long it would take an average first-time homebuying family to save up for a standard 20% down payment in San Francisco, according to a new study on mortgage stress by Lindsay David of LF Economics. David looked at mortgage stress in 30 U.S. cities, using their median incomes and median home prices. To reach his conclusions on how long it would take average first-time buyers to save up for a down payment, David used a relatively optimistic scenario, assuming that young households would be able to save 5% of their income every year, regardless of changing circumstances.

And in San Francisco, those achieving that not inconsiderable feat would still take 37 years to save a 20% down payment. A down payment commensurate with today’s prices, mind you – not projected prices 37 years from now. And San Francisco didn’t even top the list, due to its higher median income; in San Jose, it would take a few months longer.

The Bay Area isn’t the only region of California where first-time buyers would have a hard time getting a down payment together. In San Diego, it would take an average first-time buyer 33 years; in LA, it would take 32. In Riverside-San Bernadino, the average buyer can save up that down payment in next to no time – just about 20 years.

“Inflating the prices of stocks and bonds is one thing. People don’t have to live in them. Not so with homes. People have to live somewhere,” writes Wolf Street Corp. CEO Wolf Richter in Business Insider. “By inflating home prices, the Fed has inflated the costs of everyday life for all Americans. No big deal for the wealthy. But woe to those on a median income.”