The Relationship Between Homeownership and Life Satisfaction in Germany

Abstract

The article investigates the relationship between homeownership and life satisfaction in Germany, using German Socio-Economic Panel Study data from 1992 to 2009. The data not only allow controlling for a wide range of variables, but also tackle various measurement problems of previous studies. Ordered logit models support a positive relationship between homeownership and life satisfaction. In addition, regression models with fixed effects also reveal unobserved differences between homeowners and renters. Further results show that homeownership is particularly important for low-income households and that there is a significant interaction between homeownership and the condition of the dwelling as well as homeownership and the financial burden of the household. Overall, the findings indicate that policies aim at a higher degree if life satisfaction should not focus on the promotion of homeownership alone, but also support home maintenance costs.