Mortgage Advice from DeAnna Gillespie-Bangerter – RockStar Referral
Women BeWare – You’ve heard of the gender gap in pay? According to Redfin, Seattle, the gap occurs in equity building, too.
A new Redfin report (https://www.redfin.com/blog/2017/08/the-wage-gap-is-following-women-into-homeownership.html) said for every dollar of home equity single men earned over five years, single women earned just 92 cents.
Redfin examined nearly 200,000 home sales in 18 large metros in 2012, of which nearly 40 percent were purchased by single women. On those home purchases, women earned a median $171,313 of home equity over five years, compared to $186,403 of equity earned by men–a difference of $15,090 or 8.1 percent.
New Orleans was the only metro where women actually earned more home equity than men. Over the five-year period, single women there earned $8,784, or 8 percent more home equity than single men. Omaha, Neb. was the next best, with women earning 0.5 percent less equity than men. Portland, Ore. (0.8% less); Denver (2.0% less); and Oakland, Calif. (2.0% less) rounded out the top five best places for single female home equity.
Redfin reported the gender equity gap was largest in Seattle, where women earned 6.3 percent, or $20,983 less equity over the five-year period. Columbus, Ohio (6.2% less); Baltimore (6.2% less); San Francisco (6.0% less); and San Diego (5.8% less) also had high equity gaps.
Redfin Chief Economist Nela Richardson attributed the disparity in home equity pay gap, lower down payments made by women and higher student debt among women.
“Despite differences in equity appreciation, purchasing a home can help level the playing field between men and women,” Richardson said. “In addition to setting labor standards that encourage pay equity, more can and should be done at the federal and local levels to support female homeownership through affordable housing policies like down payment assistance.”
Redfin blogger and editor Natalie Schwab said the first major cause behind the home equity accumulation gap is income. She noted women’s median income has flattened since 1979, according to the National Bureau of Economic Research. Coupled with a continuing gender pay gap in the workplace, women are typically unable to save and therefore spend as much as men on housing.
“Women spent around $25,000 less on homes than their male counterparts,” Schwab wrote. “The median price of a home purchased by a single woman in 2012 was $195,000, compared to $220,000 for a single man. In several cities, men spent much more; $52,250 more in San Francisco, $50,900 more in Boston and $35,350 more in Seattle. We can assume that these more expensive homes purchased by men were larger or better located, and more likely to appreciate faster.”
The study noted women are invested less up front. While the median down payment for both men and women was 20 percent, the study noted a spike at 3.5 percent down for single female buyers and 20 percent for single male buyers.
Redfin also noted women are more likely to go to college than men and currently hold nearly 65 percent of the United States’ $1.3 trillion of student debt and take two years longer on average to pay off that debt, in part due to the gender pay gap.
“Not only does this debt affect how much home women can afford, it directly affects their access to credit, and thus loan application approval and mortgage rates,” Schwab wrote, citing Home Mortgage Disclosure Act data from 2015 showing a single woman’s likelihood of mortgage denial due to debt-to-income ratio was slightly higher than a single man’s: 30.3 percent compared to 28.1 percent. Overall, women originated fewer loans in 2015; 61.2 percent of single women who applied for originated loans, compared to 61.8 percent of single men.
Additionally, the study said another expense likely affecting some single women’s’ spending power is children. Nearly 83 percent of single parents with custody were women; one of every six custodial parents (17.5 percent) were men.