Trajectories of Life Satisfaction Before and After Homeownership: The Role of Housing Affordability Stress

Abstract

Although a growing body of research documents the association between homeownership and psychological well-being, it is unclear whether (a) time to homeownership is associated with life satisfaction and (b) housing affordability stress moderates the long-term psychological consequences of homeownership. The purpose of this study is to determine whether and how life satisfaction changes before and after homeownership, and whether this pattern differs depending on housing affordability stress. The data for this study came from 16497 adults who participated in 14 waves of the Korea Welfare Panel Study between 2007 and 2020 (132899 observations). Fixed effects regression models were used to estimate within-person trajectories of life satisfaction related to time to homeownership. To examine whether housing affordability stress mitigates psychological response to homeownership, this study included interaction effects between time to homeownership and housing affordability stress. Fixed effects estimates suggest that life satisfaction began to increase in the year preceding homeownership and reached its peak at the time of homeownership. This increased life satisfaction persisted through the third and subsequent years. The results of an interaction model revealed that the association between time to homeownership and life satisfaction exists only for those without housing affordability stress. Homeownership is a significant life event that can enhance psychological well-being. This study provides evidence of anticipatory and prolonged effects of homeownership. However, homeowners experiencing housing affordability stress may not reap the full psychological benefits.