San Jose leads nation in share of co-borrowing on home loans — and size of down payments

It makes sense, given the cost of housing in Silicon Valley.

A new report shows that San Jose has the nation’s highest share of co-borrowers for home purchases. In addition, San Jose buyers make the largest median down payments in the U.S., according to a second-quarter report from Attom Data Solutions, which compiles nationwide property data.

First, about co-borrowing: The report shows that 50.9 percent of home-purchase deals in San Jose involve co-borrowers; followed by 45.2 percent in Miami; 39.1 percent in Seattle; 31.1 percent in Los Angeles; 29.4 percent in San Diego; and 28.8 percent in Portland.

“Climbing home prices are forcing more and more borrowers to consider other options, such as leveraging a parent’s credit, in order to qualify to buy,” said Matthew Gardner, chief economist at Windermere Real Estate.

Daren Blomquist, senior vice president at Attom Data Solutions, added that buyers are “increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete.”

Which brings us to the second point: Nationally, the median down payment for single-family homes and condominiums purchased with financing in the second quarter was $18,850, or 7.3 percent of the median price of the home — up from 5.9 percent in the second quarter of 2016.

Now look at the numbers for San Jose, where buyers put down 25.2 percent of the median price of a home. Again, that was the highest median down payment in the U.S., followed by San Francisco (22.3 percent), Los Angeles (19.3 percent); Naples, Florida (18.5 percent); and the Oxnard-Thousand-Oaks-Ventura metro in southern California (17.4 percent).

Blomquist said the “rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”

That certainly applies to Silicon Valley where active listings are at historic lows. Yet in July, sales actually increased 13.0 percent year-over-year in Santa Clara County, while the median price of a single family home rose 11.0 percent year-over-year to $1,097,000.

The new report helps us understand the trend: mom and dad are helping the kids buy houses.

Read the report here.

Nationally, 22.8 percent of loans involve co-borrowers, defined as non-married borrowers listed on the mortgage or deed of trust. Memphis, Tennessee, had the lowest share of co-borrowers in the second quarter, just 10.3 percent.

Photo: This home in North Los Altos recently listed for $2.8 million. (Courtesy/Anthony Halawa and DeLeon Realty)


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