As a major milestone in life, home ownership has long been associated with the “American dream”. At the James A. Graaskamp Center for Real Estate at the University of Wisconsin-Madison, Mark Eppli believes that this is “embedded in how we think about real estate.” While buying a house is a way to build generational wealth, many Millennials are opting out of the home ownership dream. Even though it seems like all we hear about millennials is how they want to own their own home, the reality paints a very different picture
Millennials own significantly fewer homes than previous generations did at the same age, according to a new analysis of Census Bureau data. It just may turn out to be the best investment you’ve ever made. We’re all looking for ways to find true happiness — and yet, more than half of us still don’t own our own homes.
In fact, nearly 70% of millennials, as well as members of Gen X (ages 35-49) and baby boomers (ages 50-68) are renters. The link between home ownership and happiness is well documented. For example, one paper showed that people who own a home are more likely to report being happy than those who do not. This implies that if you don’t buy a home, you will probably be unhappy.
Homeownership is often regarded as the equivalent of adulthood, with all its responsibilities. Christi Carter writes that “people who own their homes tend to devote a lot more time and energy to home life’s ‘boiling pot’–its maintenance, organization, decoration, and socializing.” Eppli says the first step to settling on a home is knowing what you want. This is because the home-buying process can be daunting, with countless decisions and documents that need to be filled out.
What the research shows about happiness
Owning a home does not make people happier than renting, according to research. A new study (PDF) conducted by Ohio State University challenges the notion home owners are less happy. 600 women were interviewed about their quality of life for the study, which appeared in Housing Policy Debate: Volume 21, Issue 3. What was the reason? As a result, they had less time for leisure activities such as family meals or walks with their dogs
(Just to be clear, I am not comparing mortgages to torture. The study examined how homeowners and renters living in similar-sized houses perceived their housing experiences).
Researchers found that, after the first five years of owning a new home, over A 16-year study of over 3,000 German adults found that people experienced a significant boost in satisfaction shortly after buying a home. However, they didn’t feel happier about their lives overall
A major reason why buying a home doesn’t make us happier has to do with hedonic adaptation, which holds that after something good happens, our feelings temporarily increase, but eventually return to baseline.
“As we acquire a home, we adjust to the experience of owning a house, and eventually, the joy or happiness we derive from it diminishes,” Eppli says.
Financial strain, however, can be difficult to cope with, Carter says. “Owning a home can create chronic financial stress, which you’re not going to just adjust to,” she says.
In my own experience, the first time I purchased a home I was 18 years old, and yes, it was stressful, almost like a young woman having a child and not being able to provide for the child. The property I purchased was in disrepair, had no insulation, was in need of a complete rehab and did not have working bathrooms. This was a suicide mission from the beginning. I sold the property because I was under a great deal of stress, it resulted in financial losses. Simply put, I was not prepared for the obligation. I purchased my second home 14 years later, and after purchasing it I felt a sense of security, inner peace, and stability. It’s a great feeling to know that I will not have to worry about unruly landlords harassing me, or sneaking into my apartment while I’m at work. Please share your experiences, even if you are a tenant.