It’s not just young Americans on the sidelines of the real estate market. The vast majority of baby boomers who are renting also say buying a home is a bad bet right now.
The difference? Boomers are loving the renter’s life.
Typically those who don’t own a home worry it might be detrimental to their financial future. However, more baby boomers are in favor of renting and have little interest in buying, according to a Bank of America Homebuyer Insights Report Wednesday.
About 80% of renters in that generation, who are now 57 to 75 years old, say doing so is better than buying a home in the current environment, up from 63% a year ago, the report shows. Nearly all of that cohort also said they appreciate not having to deal with property maintenance and repair work, and prefer to avoid other financial responsibilities and stress associated with homeownership.
“If your heat pump goes out or you need to replace your roof, that is an unpredictable expense boomers don’t want to deal with,” Matt Vernon, head of consumer lending at Bank of America, said in an interview. “You may want a landlord to deal with fixing the drain, cutting the grass and others things that could go wrong.”
As the largest living adult generation, baby boomers exert a significant influence on the housing market. Many are downsizing to better suit their needs in retirement — often opting for smaller starter homes in competition with younger first-time buyers. But, with borrowing costs more than double what they were at the start of 2022, more are finding benefits to renting.
Of the group surveyed, 83% said they value the freedom and ability to move when and where they want that’s made possible when they rent. Meanwhile, many homeowners — unwilling to give up their more favorable mortgage rates — feel locked into past purchases, driving the market’s historically low inventory levels and record high prices.
There is always a cost-benefit analysis that will determine when and where to buy or rent, Vernon said. “Renting might afford you the ability to live in a prime location that offers amenities that may cost you more if you were to buy,” he said.
Of course, renting isn’t cheap. While the national median rent has eased from a peak in 2022, prices are still 22% higher than at the start of 2021, according to Apartment List.
Vernon says the highly competitive homebuying market means renters are unsure of whether now is the right time to buy. Still, the majority of prospective buyers say purchasing now or in the future is the best decision in the long run, he said. Nearly 76% of all prospective buyers said they plan to purchase a home in the next five years.
This article was provided by Bloomberg News.