Abstract. We investigate the relationship between homeownership and life as well as housing satisfaction. Following several studies, we confirm the positive relationship between housing satisfaction and homeownership using panel data from Germany. Contrary to most of the literature, we find no positive significant effects of a home purchase on life satisfaction in the long-term. Analyzing short-term effects in an event-study design, we show that both life and housing satisfaction anticipate the acquisition and adapt shortly after. Debt-free buyers, however, do not experience anticipation or adaptation effects at all. Comparing outright homebuyers to debt-financing owners, we show that having a real estate loan affects homeowners’ life satisfaction negatively. The larger the mortgage burden relative to the household income and the last rent paid, the larger is the negative effect on life satisfaction. We conclude that the mortgage burden of a home purchase can offset the positive effect of homeownership. 

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Abstract. This study investigates the relationship between homeownership and subjective well-being. Using long panel data from Germany, we find supporting evidence for greater life satisfaction among owners compared to renters only when omitting housing characteristics. This effect reduces by more than half when comparing only owners with a mortgage to renters. Examining a variety of domain satisfactions, we show that owners, regardless of debt, report greater housing satisfaction. In contrast, mortgage-holding owners are significantly less satisfied with their income compared to renters. Assuming an aggregation of domain satisfactions to life satisfaction, we argue that the negative effects of the (size of the) mortgage cancel out the positive effects of homeownership. Moreover, we find a significant negative association between indebted homeowners and emotional well-being regardless of controlling for housing amenities. Finally, we find lower subjective well-being indicators with increasing debt-to-income ratios. We conclude that the mortgage of a self-occupied home imposes a burden on life and income satisfaction as well as on emotional well-being. 

Will, S., Renz, T. My Home is My Burden? Homeownership, Financial Burden and Subjective Well-Being in a Unitary Rental Market. Applied Research Quality Life (2023). https://doi.org/10.1007/s11482-023-10184-x  

Available here.

Abstract. In contrast to the rising rents of new contracts in many major German cities, little space is given in the public debate on housing affordability to the only slowly rising rents in total. Based on the Income and Expenditure Survey, Bernd Raffelhüschen and Sebastian Will show that incomes have risen more than rents in recent years. Across Germany, the affordability of housing for rent has remained constant over the last ten years. The authors shed light on the distributional aspects of the rental cost burden by differentiating between income, age, employment status and household structure. The heterogeneity of subjective and objective rent burdens can result in social tensions.

Raffelhüschen, B. & Will, S. (2023). Zur Erschwinglichkeit von Wohnungsmieten und den sozialpolitischen Folgen. Perspektiven der Wirtschaftspolitik. https://doi.org/10.1515/pwp-2022-0022   (in German. Translation: On the affordability of housing rents and its socio-political consequences. Perspectives in Economic Policy )

 Available here.

Abstract. In this study, we calculate the implicit public pension liabilities (IPL) of all EU Member States using the projections from the 2021 Ageing Report. Our results illustrate that public pension systems in the EU may not be fiscally sustainable. Higher future pension expenditures due to demographic change are not covered by higher contributions. The net IPL vary widely across countries, from -83% of the GDP in Latvia to 889% in Romania. We show that countries with lower IPL have promised strong future declines in the benefit ratio. Arguing that such cuts may not be politically sustainable, we re-estimate the IPL using a scenario in which the declines in benefit ratios are offset following a maximum decline of 10% compared to their current level. The countries with lower IPL reduce the IPL by implementing expenditure-reducing reforms that may turn out to be politically unsustainable in the future. The postponement of cuts in pension expenditures into the future might hinder governments’ future ability to secure fiscal sustaina-bility of their pension systems.

Working Paper version.

Abstract. The prevailing notion that homeownership engenders personal contentment and fosters societal virtues is widely acknowledged, prompting numerous governments to prioritize homeownership as a central policy objective. While existing research generally supports a positive correlation between individual subjective well-being (SWB) and homeownership, the strength of this association varies across research methodologies and examined countries. The literature offers inconclusive evidence regarding the influence of cultural and social preferences, policy instruments, and the overall housing market on the happiness differential between homeowners and tenants. In this paper, we provide empirical evidence for the influence of housing policies and their outcomes on the nexus between owner-occupation and SWB measured through life satisfaction. Applying cross-sectional multi-level regression analyses on EU-SILC survey data from 22 EU and OECD member states, we estimate the effect of homeownership on life satisfaction. Our main findings underscore that the happiness gap is less pronounced in countries with a proclivity towards homeownership, while a low homeownership rate corresponds to an elevated gap. More specifically, we show that homeowners are relatively more satisfied in societies with a well-developed rental sector and stringent rental regulations, as opposed to nations that favour homeownership. Similarly, the gap widens with the taxation of the user-costs of owner-occupied housing. We argue that these outcomes reflect the societal significance ascribed to homeownership, suggesting that the fulfilment of a long-awaited homeownership aspiration contributes more substantially to SWB gains than mere satisfaction with a default housing option.

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Abstract. Das EU-Nachhaltigkeitsranking des Forschungszentrums Generationenverträge und der Stiftung Marktwirtschaft zeigt nicht nur die expliziten Schulden der 27 EU-Mitgliedstaaten, sondern auch das Ausmaß ihrer ungedeckten zukünftigen Verpflichtungen, die sich insbesondere aus dem in allen Ländern zu beobachtenden demografischen Wandel ergeben. Projiziert man die mit der Bevölkerungsalterung einhergehende Veränderung der altersabhängigen Ausgaben in die Zukunft, ist eine umfassende Nachhaltigkeitsanalyse der öffentlichen Finanzen der europäischen Staaten möglich. Die Datengrundlage der Berechnungen basiert einerseits auf dem Alterungsbericht 2021 und andererseits auf den Frühjahrs- und Sommerprognosen der Europäischen Kommission. Es wird deutlich, dass die öffentlichen Haushalte der europäischen Mitgliedstaaten im Jahr 2020 nach einer längeren Konsolidierungsphase wieder ein hohes Primärdefizit aufweisen. Daneben ist es vor allem aber der Anstieg der altersabhängigen Ausgaben in den kommenden Jahrzehnten, der im Rahmen einer Langzeitbetrachtung dazu führt, dass 20 von 27 Ländern teils hohe implizite Schulden zu verzeichnen haben. Diese übersteigen in vielen Fällen die expliziten Schulden deutlich. Eine wirkungsvolle Konsolidierung der Staatsfinanzen in der EU wird daher nur gelingen, wenn beide Segmente des Schuldeneisbergs und damit sowohl die sichtbaren expliziten als auch die unsichtbaren, impliziten Staatsschulden in Angriff genommen werden. 

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Abstract. Angesichts der enormen wirtschaftlichen Herausforderungen, vor denen Deutschland steht, ist es wichtiger denn je, politische Entscheidungen nicht nach demoskopischer oder ideologischer Gefühlslage zu treffen, sondern faktenbasiert abzuwägen und auch unbequeme Tatsachen zu berücksichtigen. Häufig ist dies allerdings nicht in ausreichendem Maße der Fall, wie die Stiftung Marktwirtschaft anhand mehrerer Beispiele zeigt. Dazu stellte sie - in Zusammenarbeit mit dem Forschungszentrum Generationenverträge der Universität Freiburg - gängige politische Narrative zur langfristigen Entwicklung der Staatsfinanzen, Inflation, Zinsentwicklung sowie Wohnkostenbelastung auf den ökonomischen Prüfstand. Dabei zeigt sich, dass die ökonomischen Realitäten häufig gänzlich anders aussehen, als die politischen Narrative vermuten lassen. Für die öffentliche, aber auch die politische Meinungsbildung lässt das wenig Gutes erwarten.

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