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Feeling Stressed? Buy a House This Year, Research Suggests

Timm Ready, CMA,  Sr. Mortgage Advisor

January 15, 2024 — 5 min read

Feeling Stressed? Buy a House This Year, Research Suggests

The journey to homeownership is a significant milestone that offers more than financial gains—in fact, it can provide physical and psychological benefits, according to researchers.

Beyond the tangible aspects of owning property, homeownership nurtures a sense of stability and security and fosters a stable and peaceful state of mind. It can also lead to a healthier lifestyle, according to researchers. Regardless of it you’re ready to buy or still saving up, use these insights to take a confident next step in your homebuying journey into the new year.

Homeowners Are, On Average, Less Stressed Than Renters

In general, renters feel financial stress more deeply and report lower levels of happiness, according to researchers. Specifically, those researchers found that financial stress plagues 26% of renters but only about 15% of homeowners.

However, renting itself is not the inherent cause of stress, ill-health, or unhappiness; instead, homeownership correlates to a higher income and cash position, relieving financial stresses and encouraging higher levels of happiness.

How does homeownership correlate to a higher income and cash position?

  • Building equity. When you own a home and make mortgage payments, you're building equity in your property. Over time, the portion of your home that you own outright increases. This equity can be utilized in various ways, such as selling the property at a profit or taking out a home equity mortgage.

RELATED: Your Complete Guide to Using Home Equity

  • Appreciation. Homeowners benefit from appreciation, which can significantly increase the value of their property. If they decide to sell, they can make a profit, which contributes to a higher cash position.
  • Tax advantages. Mortgage interest and property tax payments are deductible expenses in many tax systems, reducing the overall tax burden for homeowners. This extra money saved in taxes can contribute to a higher disposable income.

RELATED: Tax Breaks for Homeowners: Your Yearly Guide to Credits and Deductions

  • Financial discipline. When you have a mortgage, you have a fixed monthly payment. This regularity can instill financial habits, ensuring that a portion of your income goes into an investment (your home) each month.
  • Wealth accumulation. As property values increase and mortgages are paid down, homeowners build substantial wealth, which can be converted into cash or used as collateral for loans, providing them with a strong financial position.

RELATED: Renting vs. Owning: How Homeownership Can Supercharge Your Financial Future

Feeling Stressed? Buy a House This Year, Research Suggests

Why are Homeowners Less Stressed Than Renters?

Getting back to those researchers—in general, they found homeowners can save close to twice as much money per month as renters. Plus, when it comes to credit cards, renters on average will take just over nine months to pay off their debt, much longer than the five months it takes most homeowners.

In addition to financial security and faster debt repayment, homeowners also tend to experience a greater sense of stability and control over their living situation. Homeowners have the freedom to personalize and invest in their living spaces, fostering a stronger connection to their environment and community.

Moreover, homeownership represents a significant milestone and can produce a sense of pride and accomplishment. This sense of achievement can boost self-esteem and overall well-being, leading to lower stress levels.

Additionally, homeownership provides a predictable housing cost, as mortgage payments remain relatively stable over the years, unlike rental prices. This can offer a greater sense of control over one's future, especially in terms of retirement planning.

RELATED: Securing Your Golden Years Through Real Estate

Here’s how homeownership can contribute to more secure retirement planning:

Building equity. Homeowners can tap into their property's value in retirement by downsizing, taking out a home equity loan, or selling; these funds supplement income, cover expenses, and fulfill financial needs.

RELATED: Nearing Retirement? Here's How a Reverse Mortgage Could Help

Stable housing costs. While rents can increase significantly over the years, homeowners with a fixed mortgage rate don't have to worry about fluctuating housing expenses. This stability aids budgeting, making retirement planning and financial management easier.

Diversification of assets. Owning property diversifies your assets, reducing reliance on real estate alone. A diverse portfolio spreads risk, ensuring stable, long-term returns and acting as a buffer against economic uncertainties.

Rental income. Rental income can supplement your retirement funds, allowing you to maintain a comfortable lifestyle even after you stop working. Additionally, rental properties can provide tax benefits.

Feeling Stressed? Buy a House This Year, Research Suggests

LEARN MORE: The Benefits of Owning vs. Renting

Homeowners Spend Less on Housing Costs

The portion of household income allocated to housing costs significantly influences a family's lifestyle, stress levels, and more. On average, homeowners spend 16.4% of their income on expenses like mortgage payments, insurance, and taxes; on average, most renters dedicate 30% or more of their household income to rent and related expenses, like utility costs.

Why do homeowners spend less on housing costs?

This disparity highlights the financial advantages of homeownership. In general, homeowners benefit from the potential appreciation of their property and the ability to build equity over time. This serves as a financial cushion of sorts, providing homeowners with security and the opportunity for future investments. Additionally, the tax benefits associated with homeownership contribute to reducing the cost of housing, allowing families to allocate income more efficiently; in contrast, renters face the challenge of rising rents, which can strain their budget and limit their ability to save. The lower housing cost burden for homeowners not only enhances their quality of life but also provides a foundation for achieving long-term financial goals and well-being.

RELATED: How Homeownership Can Supercharge Your Financial Future

Are You Stressed in Your Current Living Space?

Regardless of where you are or where you’re going, we’re here to help you take a confident next step in your homeownership journey. Connect with your neighborhood Mortgage Advisor today, or click here for a customized quote.

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