ABSTRACT
A good understanding of the nature of homeownership is indispensable for the study of residential satisfaction. Historically, homeownership is viewed as a social norm, in the sense that a normal person should achieve it at a certain stage of her life. Social comparison is one of the affective individual responses that could influence residential satisfaction. It is reasonable to assume that social comparison affects housing expectation or aspiration, and ultimately residential satisfaction. The most convincing explanation of the Easterlin Paradox is the relative and adaptive income theory. The relative income theory establishes the presence of reference groups in people’s evaluation of life satisfaction. The relative income theory is not a black box anymore. The initial increase or decrease of residential satisfaction will gradually come back to the long-term average level. This is the prediction based on the habituation theory in the happiness literature.
