Home is where the happiness is?
Owning a home is seen as a symbol of success in some cultures – with picking up the keys to your own property seen as a rite-of-passage and one of life’s major milestones.
While homeownership can be wonderful, this picture paints a scenario that is too simple. Owning a home is typically complex financially and can carry emotional complications as well.
For example, a lifestyle implication recognised by economists – and detailed in research - is the increased difficulty for homeowners to move for a better paid or more satisfying job.
Homes and happiness appears to be a hot topic, with an article “Homeownership, the Key to Happiness?” appearing in the New York Times this week.
Correlation or causation?
In a 2012 story for eZonomics, behavioural economist Nathalie Spencer wrote that research shows a link between homeownership and wellbeing – but that it shows correlation not causality. In other words, the difference in wellbeing might be because home owners have other attributes that tend to increase happiness, such as having a job.
But a study about homeowners in Latin America from 2010 finds that owners are happier than renters, even after adjusting for factors such as education level and employment status.
You can’t call the landlord
Underestimating how much work is involved in owning a property appears to be a significant factor in happiness.
A study of German homeowners published in 2011 finds their life satisfaction improves if the home is in good condition but that it turns “increasingly negative” if the condition of the property declines.
A message for potential homeowners here is to take a realistic look at properties and make provisions for the time and money that could well be needed to fix problems when they arise.
Get a real view of real estate
The sorts of thinking traps that lead people to develop the expectation that owning a home will make us deliriously happy for years to come happen in other parts of life as well.
An eZonomics article explains these “inaccurate emotional predictions” – or, in technical terms, poor affective forecasting – hold true for lottery wins and other events people think about.
One way to combat it is to look at events in context of other things happening at the same time.
So if closing the sale of a new house, rather than focussing exclusively on the happy feeling of getting the keys, spend time considering financial and lifestyle implications as well as how to react for maintenance and repairs.