Housing Market Uncertainty Reaches 3-Year High, BofA Report Finds
Homeowners and buyers are cautiously optimistic.
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Both homeowners and prospective buyers find the current housing market unpredictable. In fact, 60% of both groups don't know if this is a good time to buy a house, according to a new Bank of America report, which notes this is a 3-year high.
However, 52% of those looking for a new home express optimism, and believe the housing market is better than it was last year.
Matt Vernon, head of consumer lending at Bank of America, provides insight from the report.
According to the report, 60% of homeowners and prospective buyers can't tell whether it's a good time to buy a house of not. This is up 3 percentage points from 2024, and 12 percentage points from 2023.
However, the majority of prospective buyers are optimistic. In fact, 75% expect both prices and interest rates to fall, and they're waiting until then to purchase a new home. This is compared to 67% who felt this way in 2024, and 62% who held this view in 2023.
'Housing affordability is definitely a concern, but I think both housing experts and prospective homebuyers see things heading in the right direction,' Vernon says. While the market still needs to improve, he says the report shows that buyers are still optimistic, and believe things are better now than they were a year ago.
'As new market data emerges, we're seeing more inventory (although delistings have also increased) and a slight cooling in price growth, which could give buyers more breathing room,' Vernon explains. 'So, while it's still a tough market, there's a sense that the tide might be starting to turn.'
In spite of any financial obstacles, Gen Z is committed to homeownership – as well as the sacrifices that may be necessary to achieve this goal. In fact, 30% of Gen Z homeowners said they took an extra job to get the money for a down payment. This is up from 28% in 2024, and 24% in 2023.
Some Gen Z homeowners are also open to living with other people in order to reach their homeownership goal. In fact, 22% of Gen Z homeowners reported that they purchased their home with siblings, compared to 12% in 2024, and 4% in 2023. The report also found that 34% of Gen Z prospective homebuyers would consider living with family or friends while waiting to purchase a home.
This generation is also open to receiving help to purchase a home. The report reveals that 21% of Gen Z prospective homebuyers plan to get a loan from parents or other family members for the down payment, compared to just 15% of the general population who say the same. Among all prospective homebuyers, this number is up from 12% in 2024 and 9% in 2023.
Last year, weather-related home losses reached record levels This increase in severe weather events did not go unnoticed by homeowners and prospective buyers. The report reveals that 62% of both groups are concerned about the impact of severe weather and natural disasters as it relates to homeownership. Also, 73% believe it's important to purchase in areas with a lower risk of these events occurring.
The report reveals that 38% of survey respondents have changed the location of their preferred home purchasing location based on that area's risk of severe weather.
Also, 23% of current homeowners say they have experienced property damage or loss in the last 5 years. due to severe weather events, and 65% of current homeowners report taking measures to prepare their home for the risk of severe weather.
If you plan to purchase a home, Vernon recommends that you start preparing early—even if you're not ready yet. 'This market can be unpredictable, but the more prepared you are, the more confident you'll feel when the right opportunity comes along,' he says. So, what does this entail? 'Get a handle on your credit, build a savings cushion, and understand what you can realistically afford,' Vernon suggests. In addition, he says you shouldn't underestimate the power of getting preapproved, as it can make a huge difference when you're ready to make an offer.
'A lot of buyers right now are waiting for rates or prices to come down, but in the meantime, use this time to strengthen your financial foundation so you're ready to act when the timing feels right,' Vernon concludes.
If you're a homeowner, check out these 5 home renovation trends in a sell'ers market.
Read the full Bank of America 2025 Homebuyer Insights Report here.
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