As Stock Portfolios Soar, First-Time Homebuyers Face a Down Payment Dilemma
If you’ve been sitting on the sidelines waiting for the right moment to buy your first home, you’re certainly not alone.
With mortgage rates at a standstill in the mid-6% range, many first-time homebuyers are using this time to build their down payment savings.
If this sounds like you, you’ve likely noticed a silver lining to the delay.
Thanks to a powerful run in the stock market, your down payment fund might actually be larger today than it was a year ago. In fact, according to a recent report from Goldman Sachs, U.S. household equity holdings have surpassed real estate as a share of net financial wealth for the first time since World War II.
While watching your brokerage balance grow should feel great, keeping your homebuying fund tied up in the stock market while waiting for the right home is a high-risk game—one that could backfire any day now.
Stocking money away
The Goldman Sachs report shared that household equity allocations are approaching 50% of financial assets in the U.S.—surpassing levels seen during the dot-com era. A massive portion of those gains has been driven by technology stocks.
“Equity gains have been the dominant driver of household wealth accumulation and the main contributor to a positive wealth effect on consumer spending,” the brokerage said in a note on Thursday, according to Reuters.
This should come as good news for anyone who invested, especially those still hoping to achieve that American dream. But it also speaks to just how few are invested in owning real estate as a portion of their portfolio these days.
The share of first-time homebuyers dropped to a record low of 21%, while the typical age of first-time buyers climbed to an all-time high of 40 years, according to the latest Profile of Home Buyers and Sellers from the National Association of Realtors®.
But here is the catch for prospective homebuyers tied up in the market while renting or living at home: B blooming brokerage is not guaranteed purchasing power.
Goldman Sachs warns that high exposure to equities leaves households unusually vulnerable to a sharp market correction. In 2026 alone, investors have seen soaring earnings and AI spending fuel a bull market with “signs of resilience,” according to Fidelity’s midyear stock market outlook.
But they also warn that an “extended oil crunch could lead to higher rates and inflation that might weigh on stocks.”
All of this is to say that, if you are keeping your down payment funds invested in the stock market, you should proceed with caution.
Investing outlook in 2026
As with anything, buying a home is all about timing. But experts, both in finance and real estate, warn consumers that trying to “time” the market is a risky game.
As is keeping your down payment funds in the stock market.
“Your portfolio value fluctuates daily—sometimes your assets are higher, while other times they can be lower—and depending on when you need to liquidate them, your available down payment funds can vary significantly,” Denese Carty, the East Coast divisional director at Churchill Mortgage, tells Realtor.com®.
Now, the timeline of buying a home is long enough that you should know well ahead of your closing date whether you have enough money to fund your down payment.
Still, if you plan to buy a home within the next 12 to 24 months, keeping your down payment in stocks creates a dangerous timing mismatch.
“While the market is roughly in balance here, I am more concerned about downside risk than upside potential, given the risk of an indefinite oil supply crunch,” said Jurrien Timmer, director of Global Macro at Fidelity Investments, in the midyear outlook.
“To help manage risk, investors would be wise to review and rebalance their portfolios as needed to ensure no exposures have grown overly large.”
Keeping your down payment safe
While some experts like Carty see the benefit of investing your down payment in the stock market for a time, others insist that those funds need to stay liquid and in accounts far less volatile.
“The minute you decide you are going to buy a home” is when you should move your money to safety, says Jeff Lichtenstein, CEO and broker at Echo Fine Properties. “Do it once you decide to purchase, not when you are looking or after it goes under contract.”
Some suggestions include high-yield savings accounts, short-term Treasury bills, and even short-term certificates of deposit (CDs).
But if you’re comfortable with the risk, remember that selling stocks in a taxable account will trigger capital gains taxes. You will need to set aside a portion of your profits from stocks for tax season, so you aren’t caught off guard at closing.
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