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In Debt but Still Happy? Examining the Relationship between Homeownership and Life Satisfaction

Author

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  • Sebastian Will
  • Timon Renz

Abstract

The present study analyses the relationship between home tenure status and life satisfaction applying fixed-effects regressions. Using data from the German Socio-Economic Panel from 1984 to 2018, we first find that compared to renting a home, owning one has an overall significant positive effect on life satisfaction. Hereby, we confirm results of already existing studies. Secondly, by examining homeowners and their different financing conditions more closely, we show that having a real estate loan impacts homeowners’ life satisfaction negatively by 0,048 points on a 10-point Likert scale. Taken together, these two antagonistic effects sum up to a null effect, which opposes most of the conclusions of related literature. By choosing to compare indebted homeowner, and not homeowners in general, to renters, we intend to contribute to a more thorough understanding of the effects of tenure status on life satisfaction. Additionally, we examine the temporal effects five years before and after the change in tenure status. As we obtain mixed results, the effects of anticipation and adaptation of life satisfaction remain to be further investigated.

Suggested Citation

  • Sebastian Will & Timon Renz, 2021. "In Debt but Still Happy? Examining the Relationship between Homeownership and Life Satisfaction," ERES eres2021_89, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2021_89
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    1. is not listed on IDEAS
    2. Gum-Ryeong Park & Jinho Kim, 2023. "Trajectories of Life Satisfaction Before and After Homeownership: The Role of Housing Affordability Stress," Journal of Happiness Studies, Springer, vol. 24(1), pages 397-408, January.
    3. Oliveira, Alessandro V.M. & Oliveira, Bruno F. & Vassallo, Moisés D., 2023. "Airport service quality perception and flight delays: Examining the influence of psychosituational latent traits of respondents in passenger satisfaction surveys," Research in Transportation Economics, Elsevier, vol. 102(C).

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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