You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20% is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.
But there can actually be financial benefits to putting down a small down payment—as low as 3%—rather than parting with so much cash up front, even if you have the money available.
This research paper from the Housing Finance Policy Center on whether children living with parents saves money and builds wealth. (Spoiler Alert: It Does Not.) It is a fascinating read, however here is the summary:
The sluggish labor market and the increase in housing and education costs following the housing market crisis have encouraged millennials to stay with their parents. These shifts may have long-term consequences, as those who live with their parents delay headship and homeownership. Even though they may save some money by extending their stay with their parents, our results show that such behavior could have a negative long-term impact on their wealth. While many have experienced a decline in their housing wealth during the recession, housing is still one of the most important tools for building long-term wealth. Goodman and Mayer (2018) find that homeownership as an investment has financially outperformed stocks and bonds, even without including benefits from tax subsidy. Choi and coauthors find that those who bought homes between the ages of 25 and 34 have the greatest housing wealth at age 60.1 Those who bought before age 25 receive the biggest housing investment return. In this report, we find no long-term advantage to living with parents. After controlling for other factors, living with parents delays headship and homeownership. Moreover, there is no evidence that those who lived with their parents were able to buy more expensive homes or put more down. While these conclusions should be treated as tentative—considering the study’s limited time frame and because the observations of long-term consequences were drawn from an older group—our results suggest that living with parents has negative long-term economic consequences.
Per the NAR end of year 2018 Buyers and Seller Profile Report, single female buyers continue to be a strong force in the market.
For the second year in a row, single female buyers accounted for 18% of all buyers. The group was the second most common household buyer type behind married couples (63%). Single male buyers came in third and accounted for half the number of buyers as their female counterparts (9%). However, single males tended to purchase more expensive homes, with a median price of $215,000, compared to single females with a median price of $189,000 (the lowest of all household buyer types).
Per the NAR end of year Buyer & Seller Profile Report, B and the internet to find the right home
For the third year in a row, 95% of buyers used the internet at some point during their home search process, and 50% said that they found the home they eventually purchased online. Eighty-six percent of buyers used a real estate agent in their home search, and repeat buyers were more likely to use an agent than first-timers (87% to 86). Overall, 87% of buyers ended up purchasing their home through a real estate agent (the same as 2017), as finding the right home and negotiating terms of sale were the top factors buyers desired from their agent. Ninety percent of respondents said they would definitely or probably use their agent again or recommend them to someone else.