This study empirically examines the effect of satisfaction with neighbor relationships on residential satisfaction of Korean households. To control for endogeneity of satisfaction with neighbor relationships to residential satisfaction and to identify factors to influence satisfaction with neighbor relationships, this study recursively estimates an ordered probit model for residential satisfaction with a probit model for satisfaction with neighbor relationships, using the data of Housing Survey in 2019. Estimation results show that the satisfaction with neighbor relationships is endogenous to residential satisfaction. If endogeneity is not considered, estimation results underestimate the effect of satisfaction with neighbor relationships on residential satisfaction. When estimated using a full sample of households of all ages, households who have satisfactory relationships with neighbors have 8 percentage points higher probability of being satisfied with their residence than those who have unsatisfactory neighborhood relationships. The marginal effect is relatively higher for the young group of households whose heads are younger than 38 years. The results also hold for the old group of households, whose heads are older than 75 years. Although homeownership is the most important determinant of satisfied relationships with neighbors, the number of children under 18 years of age appears to be a critical factor to have satisfied neighbor ties in the earlier stages of the life cycle.