If you can afford a new car, you might be closer to affording a home than you realize. According to the latest figures from Kelley Blue Book, the average new car costs $48,799. In several cities, that’s enough to cover the full cost of a down payment, or at least a large chunk of it.
Yet despite the high cost, Americans continue to splurge on car purchases—even if it means sacrificing other expenditures. An Edmunds survey of car shoppers found that 29% planned to postpone a vacation to afford their next vehicle purchase, while 11% planned to put off a home purchase. A separate survey from YouGov found that 47% of Americans prefer buying a new car over a used one, with more than half of adults aged 18 to 44 sharing that preference.
For many Americans, spending thousands of dollars on a car is normal or even expected. But unlike a house, which appreciates in value over time, a car depreciates. So, before upgrading your next vehicle, consider this: could that same money bring you closer to your homeownership goals instead?
In 36 major U.S. cities, the cost of a new car covers 10% or more of the total purchase price of a single-family home. While that might not sound like a lot, it could take years off the length of your mortgage. With the average monthly mortgage payment at $2,091 (based on the current national median home price), a $48,799 budget covers nearly two years of payments.
In Buffalo, Pittsburgh, and Cleveland, the financial benefits of reallocating your new car budget are even greater. A whopping 20% of your home could be paid for with a budget of $48,799.
Meanwhile, the average car loan stretches over 68 months (or 5.6 years), making a new vehicle a long-term financial commitment. Add in gas, insurance, and surprise repairs, and it’s easy to underestimate the real cost of owning a car. Unlike a home, your car won’t gain value, but it will shape your budget for years to come.
So, where exactly can you put your car budget to good use? In 13 cities we analyzed, mostly in the Midwest, a new car costs more than a 20% down payment on a single-family home.
In Akron, OH, where a 20% down payment equals $38,860, you’d still have more than $10,000 leftover to put towards your monthly mortgage payments. In Peoria, IL, the $30,120 down payment leaves nearly $20,000 leftover for other expenses.
Of course, living without a car isn’t realistic in every city or for every commute. But if you’re in a position to prioritize long-term financial growth over short-term luxuries, the payoff can be worth it. A used car, which averaged $25,470 in May, according to Kelley Blue Book, might not look as cool, but it could leave you with more savings to invest in equity-building opportunities like real estate.
Americans keep their cars for an average of eight years. At the end of that period, their car will have depreciated by tens of thousands of dollars. For a mid-size car with an average price of $33,666, that results in a reduced value of just $5,339 after eight years.
On the other hand, a single-family home can double in value over a ten-year period. In some growing cities, the price of a single-family home has even risen by over 100%, resulting in hundreds of thousands of dollars in gains.
Among the cities we analyzed, Tampa takes the crown for home price appreciation. From 2015 to 2025, the median single-family home price skyrocketed by 156%. A Tampa homeowner who bought a property in 2015 for $156,000 would now have gained nearly $250,000 in home equity.
Homebuyers in Miami and Orlando have also fared well, with prices rising by 139% in each. Outside of Florida, home prices in Atlanta, Indianapolis, Las Vegas, and Phoenix have also seen impressive growth of over 125%.
While the initial upfront costs of buying a home may seem steep, it’s essential to recognize that this investment is worthwhile. Over time, homeownership builds equity and often leads to substantial long-term gains. The longer you own your home, the greater your potential return.
That doesn’t mean you have to give up your car to become a homeowner. But it might mean rethinking how today’s purchases affect tomorrow’s goals. Could a used car get the job done and free up room in your budget for a down payment? These are the kinds of tradeoffs that can shape your financial future and bring homeownership closer than you think.
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