While many renters fear the longer-term consequences of renting on their financial futures, they are simultaneously unable to access the housing market due to high interest rates and prices.
According to the Homebuyer Insights Report from Bank of America, 70% of renters feel they are not making a long-term investment for their future. Seventy-two percent of renters also fear that rent increases could affect their current and long-term finances.
While 4 in 5 respondents believe renting is temporary and suits their current life stage,
higher interest rates and home prices are adding uncertainty to the home buying
landscape. Three-quarters of respondents to the Bank of America survey plan to buy
within the next five years, though 57% are unsure whether it is a good time to buy.
In the same survey conducted a year ago, only 48% of respondents were uncertain about whether it was a good time to buy. Among first-time home buyers, 62% of respondents expressed uncertainty surrounding the housing market.
“Given the highly competitive home buying 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 home
buyers overwhelmingly feel buying a home, now or in the future, is the best decision for
them in the long run.”
Bank of America’s quarterly On the move indicates a further complication in the
housing market: Population flows, particularly to markets in the South, are putting
pressure on both housing and rental supply. The Bank of America Institute finds that
while housing supply has increased in some areas in response to in-migration, the
supply of rental properties in some regions may not be sufficient to account for growing
populations.
The results of the survey indicate a majority of both homeowners and prospective home
buyers agree on the financial and emotional benefits of homeownership. Two-thirds of
renters feel they are “losing out” on such benefits by renting rather than owning.
Approximately 89% of homeowners said the idea of owning brings emotional fulfillment
rather than added stress, and 67% of prospective home buyers would prefer to own a
home for the sense of permanence and emotional stability rather than enjoying the
“flexibility” of renting. Nearly 60% of respondents said owning a home is the best long-
term decision for them, according to the survey.
In addition to the economic conditions making accessing the housing market difficult,
many prospective buyers also expressed a lack of confidence in their knowledge to
embark on the home buying journey. Forty-one percent of respondents are not
confident in their understanding of how to finance or secure a mortgage or of interest
rates in general. Thirty-nine percent of prospective buyers are not confident in their
understanding of terminology, and more than half lack confidence in their
understanding of grant programs.
Two-thirds of current homeowners also shared they would have done something
different when buying their first home, including saving more for a down payment,
spending more time shopping around for their home, considering other neighborhoods,
and saving money for new appliances or updates.
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