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70% of potential home buyers think renting could be harmful to their financial future
“Given the highly competitive home buying market, renters are unsure if 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 potential homebuyers feel that buying a home, now or in the future, is the best long-term decision for them.”
These decisions are further complicated by continued population flows across the United States. In your quarter In motion publication, the Bank of America Institute notes that cities in the South continued to see large influxes of people starting in the first quarter of 2024, often fueled by younger generations.
The Institute concludes that although the supply of housing has increased in response to population changes, the supply of rental properties in some regions may not be sufficient to cope with population growth. In this context, although 37% of HBIR respondents say that renting is the best choice at the moment, they still plan to take steps to buy a home in the near future. Among potential buyers, 81% stated that the rental is temporary and suitable for the current stage of life, and 76% plan to buy a house in the next five years.
New insights from this research show that the majority of homeowners and potential buyers agree on the many financial and emotional benefits of ownership – benefits that two-thirds (66%) of renters feel they are missing out on.
- 89% of homeowners said the idea of owning a home brings emotional satisfaction rather than added stress
- 67% of potential 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 potential home buyers said that owning a home is the best long-term decision to have control over their own living space.
However, baby boomers are an anomaly. Today, 80% of baby boomer renters believe it is better to rent than 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 repairs that renting offers (90%)
- They prefer to avoid the financial responsibilities and stress associated with owning a home (87%)
- And 83% value the feeling of freedom to move whenever and wherever they want that comes with renting rather than owning a home
Exacerbating the difficulties presented by higher interest rates and home prices, many potential buyers feel they lack the confidence to begin their home buying 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 home buying terminology
- 53% are not confident in their understanding of homebuyer subsidy programs
“Grants are a valuable resource to help bridge the gap between your savings and a down payment,” it says Vernon. “Meeting with a loan specialist can be a great first step to see if you qualify for assistance programs like Bank of America down payment and closing cost allowances.”
However, some buyers feel like they made mistakes during the home buying 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 (19%), and considering other neighborhoods ( 18%) and save money for new appliances or other upgrades they wanted to make to their home (17%).
Bank of America can help. The Bank of America Community Property Pledge, a $15 billion commitment, aims to help low- and moderate-income homebuyers across the country start building their personal wealth and family legacy through the power of home ownership. 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 matched grants for down payments and closing costs and has already awarded nearly $467 million in these grants in the first quarter of 2024, with 85% of these grants going to first-time homebuyers.
Sparks Research conducted a national online survey on behalf of Bank of America between March 5 and March 18, 2024. A total of 2,000 surveys (1,000 homeowners/1,000 renters) were completed among adults ages 18 and older, who do or share housing. financial decisions and who currently own a home/have previously owned a home or plan to own a home in the future. Additionally, 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. The selected questions allowed respondents to choose more than one answer, resulting in responses that could equate to more than 100 percent.
The Bank of America Institute is dedicated to discovering powerful insights that move business and society forward. Founded in 2022, the Institute is a think tank that draws on data and analysis 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 customers, 56 million verified digital users, $4.2 trillion in total payments in 2022, and $1.4 trillion in consumer deposits and wealth management. From this robust data set, the Institute offers a unique perspective on the health of the economy. It also elevates thought leadership across the bank by addressing long-term trends and sharing these findings with the broader public.
Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and medium-sized businesses, and large corporations with a full range of banking, investing, asset management, and other financial and management products and services. of risk. The company provides unparalleled convenience in the United States, serving approximately 69 million consumer and small business customers with approximately 3,800 retail financial centers, approximately 15,000 automated teller machines (ATMs) and award-winning digital banking services 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 provides industry-leading support to approximately 4 million small business families through a suite of innovative, easy-to-use online products and services. The company serves customers through operations in the United States, its territories and more than 35 countries. Bank of America Corporation shares are listed on the New York Stock Exchange (NYSE: BAC).
Susan Atran, Bank of America
Telephone: 1.646.599.3300
susan.atran@bofa.com<