Consumers fear the long-term consequences of renting on their financial future

Many prospective U.S. homebuyers fear missing out on the perks of owning a home. According to the newest Bank of America Homebuyer Insights Report, 72% of respondents worry about potential rent hikes impacting their finances. 

The report also reveals growing uncertainty about whether to rent or buy, with 57% of survey respondents unsure if now is a good time to purchase a home, compared to 48% last year. This uncertainty is particularly pronounced among first-time prospective homebuyers, with 62% unsure about their next move.

“Given the highly competitive homebuying market, renters are unsure whether now is the right time to buy,” Matt Vernon, head of consumer lending at Bank of America, said in a statement. “However, our research consistently shows that the vast majority of prospective homebuyers believe owning a home, now or in the future, is the best decision for them in the long run.”

The steady influx of demand adds another layer of complexity to the rental market. While housing supply has increased in response to population growth, the supply of rental properties in some regions may not be sufficient to accommodate this expansion. 

Consequently, 37% of survey respondents believe renting is the better choice for now but still plan to transition to homeownership in the near future. In fact, 81% of prospective buyers see renting as a temporary arrangement, with 76% planning to buy a home within the next five years.

Owning a home is not just a financial decision; it also carries significant emotional value. According to the survey, 89% of homeowners find emotional fulfillment in homeownership, with 67% of prospective homebuyers preferring the sense of permanence and emotional stability it offers over the flexibility of renting. 

Additionally, 58% of prospective buyers believe owning a home is the best long-term decision to have control over their living space.

But there is a notable exception among baby boomers. Eighty percent of this generation believes that it’s better to rent than to buy in the current climate, up from 63% last year.

Members of the baby boomer generation reportedly value the freedom to move when and where they want, wish to avoid the financial responsibilities and stresses associated with homeownership, and appreciate the freedom from property maintenance and repair work that renting offers.

Despite the desire to own a home, many prospective buyers lack confidence in their ability to navigate the homebuying process. For example, 41% are unsure how to secure a mortgage.

In fact, even current homeowners feel that they made mistakes during the purchase process. According to the survey, 66% of current homeowners say they would have done something differently when buying their first home. This includes saving more for a down payment (26%), spending more time shopping around (19%), considering other neighborhoods (18%), and saving money for new appliances or other updates (17%).