My Home is My Burden? Homeownership, Financial Burden and Subjective Well-Being in a Unitary Rental Market

Sebastian Will () and Timon Renz
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Timon Renz: University of Freiburg

Applied Research in Quality of Life, 2023, vol. 18, issue 5, No 4, 2227-2257

Abstract: Abstract This study investigates the relationship between homeownership and subjective well-being. Using long panel data from Germany, we find supporting evidence for greater life satisfaction among owners compared to renters only when omitting housing characteristics. This effect reduces by more than half when comparing only owners with a mortgage to renters. Examining a variety of domain satisfactions, we show that owners, regardless of debt, report greater housing satisfaction. In contrast, mortgage-holding owners are significantly less satisfied with their income compared to renters. Assuming an aggregation of domain satisfactions to life satisfaction, we argue that the negative effects of the (size of the) mortgage cancel out the positive effects of homeownership. Moreover, we find a significant negative association between indebted homeowners and emotional well-being regardless of controlling for housing amenities. Finally, we find lower subjective well-being indicators with increasing debt-to-income ratios. We conclude that the mortgage of a self-occupied home imposes a burden on life and income satisfaction as well as on emotional well-being.

Keywords: Homeownership; Well-Being; Life Satisfaction; Emotional Well-Being; Domain Satisfactions; Mortgage (search for similar items in EconPapers)
JEL-codes: D15 I31 R20 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11482-023-10184-x

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