What to Do With an Unused Down Payment

By: Anneken Tappe · November 17, 2023 · Reading Time: 2 minutes

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America’s housing market flashed red hot during the pandemic, and even though things have changed, it hasn’t really calmed down that much yet. In response, prospective buyers who feel they can’t afford their dream home are beginning to redirect the money they saved for a down payment.

Instead of building a nest-egg, many would-be homebuyers are either spending the cash, or investing in their future in other ways.

Redirected Savings

Home prices remain near record highs (median home prices peaked in the final quarter of 2022), and interest rates keep mortgage costs high.

So where is the hard-earned cash spent instead?

•   Education savings: More 529 college savings accounts were opened.

•   Investing in their homes: Existing homeowners spent roughly $489 billion on improvements over the last 12 months, up from 5.4% last year.

•   Spending on vacations: Some are simply prioritizing experiences over property.

As prospective buyers are turning away, home sales are starting to decline. Existing home sales dropped more than 15% year-over-year in September, according to the National Association of Realtors.

Read more reporting here .

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