The Psychology of Affordability

It is no secret that homeowners are wealthier than renters.  The good ole Fed has a Survey of Consumer Finances that is conducted every three years.  In 2022 the results showed the average homeowner has 38 times the amount of household wealth than a renter does. Our team has also done research on the mental health of homeowners versus renters and the many other benefits they enjoy, beyond the financial perks.   

Personally, I’ve been wondering how the drop in affordability when it comes to homes has impacted the average person on a personal level.  Specifically, I’m wondering how much does one’s inability to purchase home actually impact their level of satisfaction with life on the whole.  I have spoken with people across many age ranges, socioeconomic levels and demographics who justify renting because it fits their lifestyle.  I often sense something though.  Some shame or defensiveness…something a little salty in there. 

As a graduate student, I have access to research databases.  I went in a searched “Mental Health and Housing Affordability.”  I found a study that looked at the correlation between these two very things.  The research found such a strong relationship between housing affordability and mental health, that the authors urged lawmakers to make housing affordability a health equity issue. 

Here in my market, Northern Nevada, housing affordability for the majority of my career has been 100% (meaning that if you earned the median income for our area, you could afford the mortgage payment on the median priced home – assuming you had the down payment funds of course).  In the past 2-3 years, even if you have 20% down, that affordability index has dropped to 68% and I know that has an impact on the mental health of my community. 

So as real estate professionals, it’s time we start recognizing our power to support people and understanding our role in all of this.