The recently retired striker - a former domestic and international team-mate of the England international - believes Rooney's transfer request at Old Trafford was prompted by Robin van Persie's immediate success at the club.
The Dutchman notched 30 goals in his opening season at United, making him the focal point of Sir Alex Ferguson's attack and Owen believes Rooney is in need of similar attention.
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"If you're the striker in a team for so long you like having that pressure it puts you under, and when someone comes in and gets picked ahead of you on certain occasions, it knocks your confidence a bit and consequently he's not feeling on top of the world.
"He wants to be scoring goals on a regular basis for Manchester United. If that's going to happen then he'll be more than happy to stay."
And Owen was unequivocal about where Rooney should play next season, insisting an Old Trafford departure would be the worst possible choice for the striker.
"His ideal situation would just to be back in the United team, feeling at the top of his game again and staying put," he said.
"Why would he want to move away from a club like Manchester United? They've got a new manager now, so hopefully [David] Moyes and Rooney will be on the same page he'll be back and banging the goals in next year."
"I don't think it's a case that it's his last chance for a big move, you don't get anywhere bigger than Manchester United.
"It's more a case of, is he wanted, is he loved, is he appreciated? He wants to be the top man, the main goalscorer, and I think that's what it all boils down to."