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BofA Report: 70% of Prospective Homebuyers Feel Renting Could be Detrimental to their Financial Future

BAC | May 15, 2024

More boomers favor renting, with little interest in buying a home

CHARLOTTE, N.C., May 15, 2024 /PRNewswire/ -- Many prospective homebuyers fear the long-term consequences of renting, including 70% who feel they're not making a long-term investment in their future, and 72% who worry that rent increases could affect their current and long-term finances, according to a new Bank of America Homebuyer Insights Report (HBIR), conducted in partnership with Bank of America Institute.

However, with higher interest rates and home prices, uncertainty over whether to keep renting or to buy a home in the current market has grown. Today, 57% of respondents are unsure whether it's a good time to buy, compared to 48% at this time last year. This trend is even more prevalent among first-time homebuyers, as 62% shared they're unsure what to do.

"Given the highly competitive homebuying market, renters are unsure whether now is the right time to buy," says Matt Vernon, Head of Consumer Lending at Bank of America. "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."

These decisions are further complicated by the continued population flows across the United States. In its quarterly On the move publication, Bank of America Institute notes that cities in the South continued to see large inflows of people as of the first quarter of 2024, often fueled by the younger generations.

The Institute finds that while housing supply has increased in response to population change, the supply of rental properties in some regions may not be sufficient to account for growing populations. Against this background, while 37% of respondents in the HBIR say renting is the better choice right now, they still plan to take steps towards buying a home in the near future. Among prospective buyers, 81% said that renting is temporary and suits their current stage in life, and 76% are planning to buy a home within the next five years.

The Emotional Value of Owning vs. Renting
New insights from this research show that most homeowners and prospective homebuyers agree on the many financial and emotional benefits of homeownership—benefits that two-thirds (66%) of renters feel they're losing out on.

89% of homeowners said that the idea of owning a home brings emotional fulfillment rather than added stress
67% of prospective homebuyers would prefer to own a home for the sense of permanence and emotional stability it provides, rather than the flexibility of renting
58% of prospective homebuyers said that owning a home is the best long-term decision for them to have control over their own living space

However, baby boomers are an anomaly. Today, 80% of baby boomer renters believe that it's better to rent than to buy a home in the current environment – up from 63% a year ago. This can be attributed in part to the fact that baby boomers say:

They appreciate the freedom from property maintenance and repair work that renting offers (90%)
They prefer to avoid the financial responsibilities and stresses associated with homeownership (87%)
And 83% value the sense of freedom to move when and where they want to that comes with renting instead of owning a home

Lacking Confidence & Avoiding Mistakes
Exacerbating the difficulties presented by higher interest rates and home prices, many prospective buyers feel that they lack the confidence needed to begin their homebuying journey, and don't want to make a mistake.

41% are not confident in their understanding of how to finance or secure a mortgage
41% are not confident in their understanding of interest rates
39% are not confident they understand homebuying terminology
53% are not confident in their understanding of homebuying grant programs

"Grants are a valuable resource to help bridge the gap between your savings and a downpayment," shares Vernon. "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."

However, some buyers do feel they made mistakes during the homebuying process. Two-thirds (66%) of current homeowners said they would have done something differently when buying their first home, including: saving more for a down payment (26%), spending more time shopping around (19%) and considering other neighborhoods (18%), and saving money for new appliances or other updates they wanted to make to the home (17%).

Community Homeownership Commitment™
Bank of America can help. The Bank of America Community Homeownership Commitment, a $15 billion commitment, aims to help low- and moderate-income homebuyers across the country begin to build their personal wealth and family legacy through the power of homeownership. The program includes a combination of specially designed products, resources and expertise as well as one of the most generous grant programs in the industry. Bank of America offers up to $17,500 in combined down payment and closing costs grants and has already granted nearly $467 million in those grants as of the first quarter 2024, with 85% of those grants going to first-time homebuyers.

About Bank of America's Homebuyer Insights Report
Sparks Research conducted a national online survey on behalf of Bank of America between March 5th and March 18th, 2024. A total of 2,000 surveys (1000 homeowners / 1000 renters) were completed with adults 18 years old or older, who make or share in household financial decisions, and who currently own a home/previously owned a home or plan to own a home in the future. In addition, 200 additional surveys were conducted with first time homeowners (for a total of 615 responses), and 200 additional surveys were conducted with prospective first-time homeowners (for a total of 972 responses). The margin of error for the national quota is +/- 2.2 percent at the 95 percent confidence level. Select questions allowed respondents to choose more than one answer, resulting in responses that may equate to more than 100 percent.

About Bank of America Institute
Bank of America Institute is dedicated to uncovering powerful insights that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analyses from across the bank and the world to provide timely and original perspectives on the economy, sustainability, and global transformation. The Institute leverages the depth and breadth of the bank's proprietary data, from approximately 68 million consumer and small business clients, 56 million verified digital users, $4.2 trillion in total payments in 2022 and $1.4 trillion in consumer and wealth management deposits. From this robust data set, the Institute provides a unique perspective on the health of the economy. It also elevates thought leadership from throughout the bank that addresses long-term trends and shares these findings with the general public.

Bank of America
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 57 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

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Reporters may contact:

Susan Atran, Bank of America
Phone: 1.646.599.3300
susan.atran@bofa.com