Article by:
Dr. Darren D. Moore, Ph.D.
The current housing market faces extremely unfavorable conditions, with studies showing that only around 23% of homes on the market are affordable for the average American household. This means the housing market is short of more than 300,000 affordable homes. Likewise, once we add in additional contextual factors such as race/ethnicity, socio-economic status, and household income, we acknowledge that certain communities may be disproportionately impacted by the housing crisis when compared to others.
As a result, individuals are either paying more than they are comfortable with for their homes resulting in being “housepoor,” or trying to bring in additional revenue by looking for a second, third, or fourth job. As an alternative, some individuals are trying to, “ride out” the housing market in hopes of finding more favorable conditions in the future. All of these scenarios present financial obstacles that could have a negative psychological impact.
Why homeownership being out of reach for many Americans is bad for their mental health
Financial uncertainty can have significant negative impacts on a person’s mental health. According to a survey conducted by Bankrate, 52% of Americans say that money has a negative impact on their mental health. Additionally, 82% say that economic factors can cause mental health issues, such as feelings of stress, anxiety, worrisome thoughts, loss of sleep, depression, and more.
Ultimately, the prospect of homeownership has become an essential facet of the American Dream. People often associate homeownership with benefits such as stability, investment, and a sense of belonging — all of which are feelings many hope to achieve with the American Dream. Sadly, this American Dream is becoming even more out of reach to a majority of Americans due to the uncertainty of economic conditions as they stand today.
Although many will debate whether the American Dream is still alive or not, there is no debate that the financial landscape of our country has experienced a significant shift. Younger generations are used to hearing stories from older generations saying, “By the time I was your age, we owned homes, had started families, or both.”
However, the cost of living in the United States has increased dramatically, with the consumer price index (CPI) increasing by 3% in the last 12 months alone and the rise of student loan debt in the United States. In other words, it is substantially more expensive to buy a home, attend higher education, or start a family than decades ago, when older generations could do these things presumably with less stress when they were younger.
How the rising cost of homes has a negative psychological impact
Still, this does not change the fact that the inability to buy a home can create significant feelings of insecurity and anxiety, as those who do not own their home often have to worry about finding affordable housing or fear being priced out of the housing market altogether. If someone is coming up on the end of their lease, they may feel trapped in renewing their lease at a less than favorable rate because they have no other choice.
Furthermore, this assumes renters even have the opportunity to renew their leases. In the current housing landscape, real estate is in such high demand that rental opportunities and listings are becoming harder to find. Some landlords may even decide that it is to their advantage to sell the property, rather than continue to rent it out to their current tenants. Thus, even if a renter can find affordable housing, they may face anxiety over the potential of a rent hike, or not being able to renew their lease. While there may be some housing assistance programs in certain locations such as Neighborhoods Assistance Corporation of America, among others, these programs often have long wait lists, strict income requirements, and are not available to everyone, resulting in even more housing insecurity.
Consistently dealing with this uncertainty year after year can contribute to persistent feelings of finance-induced stress and anxiety. Dealing with the increasing costs of rent or saving more money than usual in an attempt to put home ownership within financial reach could strain an individual’s finances to the point where they also begin to worry about their ability to afford other essential expenses.
Eventually, the constant pressure to afford the stability of homeownership can bring about feelings of disappointment and loss, grieving the lifestyle they once had. Especially if one had felt this sense of stability in the past, and lost it — which can be caused by any number of reasons, such as having to relocate to a new city for work — they could feel like a stable future is entirely unattainable.
There are also other impacts that not being able to own a home could have on individuals, which could in turn cause negative effects on their mental health. For example, if an individual has to move frequently from place to place to avoid rent hikes, they could face difficulties with their employment and changing commutes. If families have children, their kids could be distressed by having to change schools, which could have a negative impact on school performance. Relationships could also be strained by the prospect of starting over in a new neighborhood or city, as people lose friendships and connections with their neighbors. These issues may disproportionately impact the African American community, as well as other minority populations who may have historically experienced other barriers to home ownership.
While the outlook of the housing market remains rather bleak, there are a few things that individuals can consider doing to quell their feelings of anxiety and depression. This may include working with a mental health professional to address the psychological ramifications of the housing crisis, as well as working with a financial planner who can assist with developing strategies to prepare for homeownership and maintain homeownership once received.
As a society, we must realize how important the housing crisis is for the well-being of the American people, not only because shelter is a fundamental need for all human beings, but also because lack of housing stability can have a massively detrimental psychological impact on the lives of individuals, couples, and families that can have long-lasting effects.
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ABOUT THE AUTHOR: Darren D. Moore, Ph.D., MAED, LMFT, is a Father, Husband, Clinical Professor, and Licensed Marriage and Family Therapist. He owns I AM MOORE, LLC, a counseling and consulting practice in Georgia providing individual, couple, family, and group therapy services in GA, AL, NY, NC, IL, and FL, as well as consulting across the United States. Dr. Moore currently serves as the Associate Director for Clinical Training and Supervision in the master’s program in Marriage and Family Therapy at the Family Institute, Northwestern University. Dr. Moore obtained his Ph.D. in Human Development: Marriage and Family Therapy from Virginia Tech, his MS. in Marriage and Family Therapy from Valdosta State University, his BA. in African American Studies from the University of Minnesota and holds a MAED in Higher and Postsecondary Education from Teachers College, Columbia University. Dr. Moore has been featured on various television stations as well as Newsweek and Men's Health.