A new Bank of America Homebuyer Insights Report (HBIR) reveals that 70% of prospective homebuyers feel renting may harm their financial future. Renters fear they are missing out on long-term investments, and 72% worry about rent increases impacting their finances.
With high interest rates and home prices, uncertainty about whether to rent or buy has increased. Today, 57% of respondents are unsure if it’s a good time to buy, up from 48% last year. First-time homebuyers are even more unsure, with 62% uncertain about their next steps.
Matt Vernon, Head of Consumer Lending at Bank of America, highlights the dilemma:
“Given the highly competitive homebuying market, renters are unsure whether now is the right time to buy. That said, our research continues to show that the vast majority of prospective homebuyers overwhelmingly feel buying a home, now or in the future, is the best decision for them in the long run.”
The Bank of America Institute notes that cities in the South are experiencing large inflows of people, often driven by younger generations. While housing supply has increased in response, rental property supply may not meet the demand in some areas.
Despite 37% of HBIR respondents believing renting is better right now, many plan to buy a home soon. Among prospective buyers, 81% view renting as temporary, and 76% plan to buy a home within five years.
The research highlights the emotional and financial benefits of homeownership. Two-thirds (66%) of renters feel they miss out on these benefits.
- 89% of homeowners say owning a home brings emotional fulfillment.
- 67% of prospective buyers prefer homeownership for permanence and emotional stability.
- 58% believe owning a home is the best long-term decision for controlling their living space.
Baby boomers stand out, with 80% of boomer renters believing renting is better than buying, up from 63% last year. They appreciate the freedom from property maintenance (90%), financial responsibilities (87%), and the flexibility to move (83%).
High interest rates and home prices are not the only challenges. Many prospective buyers lack confidence in their homebuying knowledge:
- 41% are not confident in financing or securing a mortgage.
- 41% are not confident in understanding interest rates.
- 39% do not understand home buying terminology.
- 53% are unsure about homebuying grant programs.
Matt Vernon suggests meeting with a lending specialist as a first step:
“Grants are a valuable resource to help bridge the gap between your savings and a downpayment. Meeting with a lending specialist can be a great first step to see if you qualify for assistance programs, such as Bank of America’s down payment and closing cost grants.”
Many current homeowners would have done things differently when buying their first home. Two-thirds (66%) regret not saving more for a down payment (26%), spending more time shopping around (19%), considering other neighborhoods (18%), and saving for new appliances or updates (17%).
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