Ownership and psychological well-being

In western societies, ownership of real estate property forms part of the outward signs of social success and constitutes one of the primary goals of human life. This accomplishment produces a feeling of satisfaction with life which renters do not experience. As well, owners can obtain great satisfaction from involving themselves in the major work of fashioning their dwelling to suit their tastes. Generally, owners are more motivated to maintain and improve their residence than renters who can only experience the immediate satisfaction they derive from their residence. Studies which have looked at the differences in the degree of satisfaction in life between owners and renters confirm that owners are more satisfied than renters (Rossi and Weber, 1996). In a longitudinal study on low income families inBaltimore, Rohe and Basolo (1997) observed that, a year and a half and three years after their acquisition of property, new owners had obtained a significant enhancement in their degree of satisfaction of life.

The social status and freedom of movement associated with real estate can also bring a growth in self-esteem on the part of owners who feel a greater control over their lives. Three mechanisms can come into play to link property to self-esteem: the opinion of others, social comparisons and a feeling of empowerment. If the opinion of others for an individual changes when he acquires property, then this development can generate a boost in self-esteem. The effect is the same if the individual himself thinks that his acquisition of property makes him a success compared to renters. To be fixed on a goal, to be in the process of achieving it, and to gain more autonomy in  private life are all factors which increase the perceived level of control over one’s life. The empirical data generally arrive at a positive connection between ownership of real estate and self-esteem (Balfor and Smith, 1996) but this connection appears to be not fully robust.

Finally, other studies (Evans, Wells and Moch, 2003) have sought to assess the link between the psychological health of the occupant of a residence and the type of tenure (ownership or rental). In agreement with work already cited, these studies find better psychological health among owners than among renters.

Cairney and Boyle (2004) wished to see if this assertion held after distinction between owners with and without a mortgage to pay off. They studied the answers of more than 8000 Canadians to a telephone survey conducted by social services. The variable monitored was the level of psychological distress, which was assessed from replies to the following questions:

“During the past few weeks, how often have you felt…..

…very lonely or cut off from other people,

…depressed or very unhappy,

…fraught with worry,

…so restless you could not sit down and relax,

…annoyed because someone criticized you?”

To each of these questions, the subjects had to answer “never”, “sometimes” or “often”. The answers were then coded numerically and added to give a total score which reflected the level of psychological distress. The authors then made a regression of this score of psychological distress on several variables including the type of tenure, age, marital status, household income, level of education and level of stress felt by the individual. For equivalent situations, the renters appeared to be suffering greater distress than owners, whether with or without a mortgage. The effect of the type of tenure of the residence on psychological distress was however about half as important as that of marital status; the divorced and widowed, and to a lesser extent, singles feel more distress than married people. Finally it appears that the differences in psychological well-being between the three types of residence increases with the level of stress felt.  The fact of having a stressful life increases the feeling of malaise that accompanies holding a mortgage or renting a living space.


The study of Cairney and Boyle is interesting because the division of owners into those who have to pay off a mortgage and those who have already paid for their residence allows a control (indirect and approximate) of the wealth of the individuals. The fact that the positive impact of ownership on psychological well-being holds even for those with a mortgage shows, without doubt, it is not just a question of wealth. Nevertheless, other studies which directly control differences in wealth remain to be performed in order that the robustness of the relationship be confirmed.

Source: 50 psychological experiments for investors, Mickaël Mangot, Wiley (2009)

To learn more

BALFOR D.L. and SMITH J.L. (1996), “Transforming lease-purchase housing programs for low- income families: towards empowerment and engagement”, Journal of Urban Affairs, 18, 173-188.

CAIRNEY J. and BOYLE M. (2004), “Homeownership, mortgages and psychological distress”, Housing Studies, 19 (2), 161-174.

EVANS G., WELLS  N. and MOCH A. (2003), “Housing and mental health: a review of the evidence and a methodological and conceptual critique”, Journal of Social Issues, 59 (3), 475-500.

ROHE W.M. and BASOLO V. (1997), “Long-term effects of homeownership on the self-perceptions and social interactions of low-income persons”, Environment and Behavior, 29, 793-819.

ROSSI P.H. and WEBER E.W. (1996), “The social benefits of homeownership: empirical evidence from national surveys”, Housing Policy Debate, 7, 1-35.