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

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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.

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Notes

  1. Throughout the paper, we do not distinguish whether someone occupies a 'house' or an 'apartment'—we refer to both as 'housing' or ‘home’.

  2. For the sake of brevity, we use both “loan” and “mortgage” to refer only to a property loan for an owner-occupied home.

  3. Although we try to rule out many confounding variables in trying to identify the ownership effect on the SWB indicators, we do not claim a causal relationship throughout the paper.

  4. A recent and very detailed overview of hedonic (emotional) well-being is provided by Ryff et al. (2021).

  5. For instance, “How often have you felt angry in the last four weeks? Very rarely – Rarely – Occasionally – Often – Very often?”.

  6. An overview of the questions related to the variables and the variables’ specifications can be found in Table 5 in the appendix.

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  1. University of Freiburg, Freiburg, Germany

    Sebastian Will & Timon Renz

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Table 5 List of variables
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Table 6 Unrestricted sample descriptive statistics
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Will, S., Renz, T. My Home is My Burden? Homeownership, Financial Burden and Subjective Well-Being in a Unitary Rental Market. Applied Research Quality Life 18, 2227–2257 (2023). https://doi.org/10.1007/s11482-023-10184-x

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