Renters Fear Missing Out On Homeownership — Except One Group

Housing affordability issues continue to make homeownership more of a dream than a reality for many people. But those who can’t afford to buy a house are finding that renting is also problematic. According to a report by Harvard University’s Joint Center for Housing Studies, in 2022, a full half of renter households were cost-burdened, which means that they spent more than 30% of their income on rent and utilities. And of these 22.4 million cost-burdened renters, 12.1 million of them spend more than half of their income on rent and utilities.

However, a new report by Bank of America reveals that renters are worrying about the long-term effects of renting. I asked Matt Vernon, head of consumer lending at Bank of America, to walk me through the report.

Among renters who are prospective homebuyers:

• 70% feel they are not investing in their financial future by renting;
• 72% fear rent hikes could jeopardize their financial stability;
• 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.

“Our data found several reasons renters feel that buying a home is better for them financially in the long-term, including the desire to build equity over time, to have an asset that can be passed on to others in the family, and to have a retirement asset,” Vernon says.

“Other reasons include having space for their family to grow and expand, and the desire to have control over their living space,” he adds.

That’s understandable since some states have rent control laws while others don’t. In the case of the latter, rent can be increased as often as desired — as long as it’s at the end of a lease term and reasonable notice (for example, 30 days) is given.

However, some members of one generation have a different view on renting:

Among Baby Boomers who rent:

• 90% appreciate the freedom from property maintenance and repair work;
• 87% prefer to avoid the financial responsibilities and stress associated with homeownership; and
• 83% value the sense of freedom to move when and where they want to.

Vernon says it’s important to remember that many Baby Boomers are renting by choice. “They don’t want to deal with the maintenance and repairs that owning a home would require, and would rather have a landlord to call when there’s a leak or anything else goes wrong,” he explains.

And since many Baby Boomers may soon be living on a fixed income in retirement, he says they find it valuable to know exactly what costs to expect when it comes to caring for and maintaining their living space.