The State of Affordable Homeownership Is Female

The State of Affordable Homeownership Is Female

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At nearly all income levels, investing in a home is the key to building equity and generating wealth.  This is especially important for single women who own just 32 cents for each dollar owned by single white men. Single black and Latino women own just one cent on the dollar, (Altomore).   Historically, paths to homeownership were “gender-differentiated.”  Women were more likely to become homeowners only by retaining a home after divorce, the death of a spouse, or by inheriting a parent’s home, (Quets et al).  Men, however, were more likely to purchase their own homes.  But things are changing.  Over the last few decades, homeownership has become more gender balanced.  The National Association of Realtors reports that since the late 1990s, single women, with or without children, have been purchasing homes at higher rates than single men. In 2012, sixteen percent of all homebuyers were single females while only 9 percent were single males, (Quets et al).  Today, single women are the second largest buying group, making up twenty percent of homebuyers, (NAR).   And five times the number of single minority female heads of household are purchasing homes today, (Guerrero).    In fact, of the fifty largest markets in the U.S., there is not one market where single men own more than single women, (Richardson).  The state of affordable homeownership is female.

So, why do single women lead the pack in home purchases?  Over the last thirty years, more women have pursued higher education.  Today, there is only a two percent gap between women and men with bachelor’s degrees, (Goodman).  Studies also show that women give homeownership higher priority than men. Sixty-four percent of women said that they considered homeownership an “essential” component of the American dream, versus only 52 percent of men, (Quets et al).   That combination of greater earning power and aspiration has led to women bolstering the home sales market.

The benefits of female homeownership are astounding.  A home is more than sticks and bricks.  With monthly rent amounts increasing, a home is a smart way for a women to invest her hard-earned money.  Today, women are enjoying the ability to build equity without relying on a spouse, roommate or parents.  Women are setting themselves and their families up for long-term financial security using a home as a built-in savings plan.

And not only does a home improve financial health, but mental, physical, emotional and community health as well.   Homeownership increases stability.  Owners are far less likely to move and move less frequently than renters leading to long-term relationships and stronger social ties and greater social capital.  Homeownership raises educational outcomes for children and improves graduation rates.  Since homeowners have a stake in the neighborhood, they are also more likely to maintain their homes and participate in community, lending to greater community quality of life.  Studies also show that LMI people who recently became homeowners reported higher life satisfaction, higher self-esteem, and higher perceived control over their lives, (Benefits).

But homeownership opportunities are not created equal.  There are significant differences in purchasing power, purchase location, and lending discrimination and inequity between men and women.

 The Wage Gap

Despite gains in education, women make only .81 for every dollar men earn.  There’s an even greater gap for women of color.   And the average salary for a female is 20k less than a male in a similar position.  While the education gap has closed, the income gap has only decreased by $1,000 in the last thirty years, (Goodman).  That’s right—a whopping $1,000 in thirty years.  Additionally, occupational segregation still pushes large numbers of women into low-paying domestic, retail, healthcare, and hospitality jobs. Although women make up approximately half of the national workforce, they compose 60 percent of the minimum-wage workforce and an overwhelming 73 percent of the “tipped” workforce, (Quets et al.).   What does this mean?  Long and short, women can’t afford as much as their male counterparts.  The average home owned by a single male is worth 215k compared to 189k for a single female owner.   Often women must purchase in less desirable neighborhoods or must sacrifice on size or features which can have long term effects on appreciation and marketability.

Childcare and Paid Leave. 

Typically the primary care giver for children or aging family members, many single women must take on the additional financial burden of childcare expenses to get and keep those jobs above. Childcare expenses can stretch an already strained budget to the breaking point further increasing disparities in wealth building, (Quets et al.).   In addition, mothers often face an unspoken, yet very real, penalty called the “mom wage gap,” because in the United States there is no guaranteed paid time off for caregiving responsibilities, (NCRC).

Lending Discrimination

And then there’s lending.  Women are denied at a higher rate than men due to higher debt-to-income ratios and lower credit scores even though women are more reliable with payments and have lower default rates than men, (NCRC).   For those same reasons, women that are approved for a mortgage often have higher interest rates.  Because loans are harder to qualify for, women are also more susceptible to predatory lending like contracts for deed (Women).  After single women buy a home, they then face discrepancies in the rates of appreciation of housing compared to single men. Male-owned homes appreciated by 33 percent over 15 years while female-owned homes appreciated by 31 percent, (Realty-Trac).  That two percent makes a big difference in economic gains with the rising cost of homes today.

College Debt

Back to those educational gains.  Women carry a higher level of college debt.  This is especially true for black women who are the fastest growing segment in college enrollment of all demographic groups.  Did you know that women hold two-thirds of the nation’s college debt at nearly $890B (Haverty).  Higher debt means less discretionary income making it harder to save, and increases DTI ratios, making it harder to qualify for a mortgage.

Down payment

Additionally, down payments remain a challenge.  Over 40% of women state that saving enough for a down payment is the largest obstacle to owning a home (Haverty).  Lower wages, childcare, unpaid time off, and college debt all lead to less in savings.

And yet…

And yet.  Despite the challenges, single women are the second largest buying group behind married couples.  Why?  Homeownership is an effective way for women to accrue resources and greater overall economic stability.  Owning a home gives low-and-moderate-income single women and female heads of household an asset and a means of building wealth over time, making it an attractive option compared to renting or living with family.  A home allows women to establish roots, to engage in community, to build memories.  Homeownership builds confidence and independence, not only in women, but all household members, and provides a means for self-sufficiency and upward mobility.  The future state of homeownership is female.

So you’re ready to buy.  What now?

Single women still face more challenges and obstacles during the homebuying process than men.  Knowing where to start and equipping yourself with the resources for success are key.

• Improve your credit. Your credit score is one of the most important measures of your financial health. It tells lenders how responsibly you use credit.  To improve your score, pull a copy of your report from each of the three reporting bureaus as your starting point.  You can pull one time per year for free without impacting your score.   Clear up any delinquencies.  Pay your bills on time—even if it’s the minimum payment.  Minimize hard pulls.  And limit credit utilization to thirty-percent or less.
• Automate your savings. Use direct deposit with your employer and set aside a specific amount into a savings account each pay period.
• Homebuyer education. Housing counseling is always a good idea.  Learn how to navigate the mortgage process, the importance of credit and debt-to-income ratios, and homebuying basics.
• Find a good agent. Interview several agents until you find a partner that shares your values and is aligned with your goals.
• Shop around. The mortgage process can be daunting and it’s important to work with a lender that will provide great service, competitive rates, and affordable loan options and programs that meet your budget and goals.
• Prequalify. Before you even start your home shopping, it’s a good idea to see what you can afford.

For generations, homeownership has been an essential part of the American dream.  But for many, that dream is just out of reach.  At GROWTH, we are committed to making homeownership possible for more people.  While women have closed the gap in education and wages, they still face more challenges than couples or single men buying homes.  Our mission is to address the inequity and disparity still alive in the nation’s housing market and to promote homeownership for low-to-moderate-income families and in low-to-moderate income neighborhoods.

Works Cited:

Altomore, Laura. “Helping Women Build Assets through Successful Homeownership.” GreenMoney Journal, Green Money, 3 Jan. 2020,  www.greenmoney.com/helping-women-build-assets-through-successful-homeownership/

Babb, Christina Hughes. “Progress, Problems When It Comes to Women’s Homeownership.” TheMReport.com, MReport, 15 Mar. 2021, www.themreport.com/daily-dose/03-15-2021/progress-problems-when-it-comes-to-womens-homeownership

“Benefits of Homeownership and Stable Housing.” NATIONAL ASSOCIATION OF REALTORS®, Apr. 2012, www.nar.realtor/sites/default/files/migration_files/social-benefits-of-stable-housing-2012-04.pdf

Goodman, Laurie, et al. “More Women Have Become Homeowners and Heads of Household. Could the Pandemic Undo That Progress?” Urban Institute, 16 Mar. 2021, www.urban.org/urban-wire/more-women-have-become-homeowners-and-heads-household-could-pandemic-undo-progress#:~:text=Along%20with%20the%20increase%20in,70.6%20percent%20to%2067.1%20percent

Guerrero, Talita. “Council Post: Female Homeownership Is On The Rise, But There’s Still A Gap.” Forbes, Forbes Magazine, 17 Sept. 2020, www.forbes.com/sites/forbesbusinesscouncil/2020/09/18/female-homeownership-is-on-the-rise-but-theres-still-a-gap/?sh=364dbc4c5940.

Haverty, Laura. “3 Reasons Why It’s Harder for Women to Buy Homes.” NBCNews.com, NBCUniversal News Group, 5 Feb. 2019, www.nbcnews.com/know-your-value/feature/3-reasons-why-it-s-harder-women-buy-homes-ncna966881

NAR. “Women Home Buyers.” www.nar.realtor, National Association of Realtors, 2020, www.nar.realtor/women-home-buyers

NCRC. “Building Economic Security for Women ” NCRC.” NCRC.Org, 26 Apr. 2019, www.ncrc.org/building-economic-security-for-women

Quets, Gail, et al. “A Gender Lens on Affordable Housing.” Https://Www.icrw.org/Wp-Content/Uploads/2016/11/gender_lens_on_affordable_housing_by_regender_final-1.Pdf, International Center for Research on Women, Nov. 2016, www.icrw.org/wp-content/uploads/2016/11/gender_lens_on_affordable_housing_by_regender_final-1.pdf

RealtyTrac, The Housing Gender Gap, 2015, available at https://www.realtytrac.com/news/realtytrac-housing-gender-gap-analysis/

Richardson, Brenda. “Single Women Are Propping Up the First-Time Home Buyer Segment.” Forbes, Forbes Magazine, 15 Mar. 2021, www.forbes.com/sites/brendarichardson/2021/03/11/single-women-are-propping-up-the-first-time-home-buyer-segment/?sh=5f882851526d.

“Women and Homeownership: The Hurdles and Why We Must Overcome Them.” Women and Homeownership: The Hurdles and Why We Must Overcome Them   | Habitat for Humanity Chicago, Habitat for Humanity Chicago, Aug. 2018, www.habitatchicago.org/news/women-and-homeownership-hurdles-and-why-we-must-overcome-them