During the month of March, we celebrate International Women's Day and examine how Home Ownership is empowering women in 2024.
Women demanding equality in work opportunities and conditions march along Beacon Street in Boston in March 1970.
(Don Preston / The Boston Globe via Getty Images)
A History of Home Ownership - Out of Reach for Single Women Until 50 Years Ago
It was not until 1974 that women were legally protected to obtain a mortgage without a co-signer. In 1974, the Equal Credit Opportunity Act granted single women the right to apply for loans and credit, removing one key barrier to homeownership. Prior to the passage of the Fair Housing Act's prohibitions against "sex" discrimination in housing-related transactions and the protections of the Equal Credit Opportunity Act, it was commonplace for a widow to need a male relative as a co-signer. Under federal law, women had no legal recourse for this or any other lending discrimination.
In 1981, 73% of home buyers were married couples, 11% were single women and 10% were single men. Today, those shares stand at 59% married couples, 19% single women, and 10% single men. The highest share of single women buyers was in 2006, when the share stood at 22%. Between 2016 and 2022, the share of single women will be between 17% and 19%. In 2010, the share of single men rose to a high of 12% but has stayed between 7% and 9% of buyers in recent years.
Why Are Single Women Currently Outpacing Single Men in Home Ownership?
Both men and women are most likely to say they are purchasing for the desire to own a home of their own, but significantly more women purchase to be close to friends and family. Men are more likely to report buying because of a change in family situation, such as a divorce, death, or birth of a child. When collecting if a buyer is single now, a data point not collected is if the buyer was once married and is now widowed or divorced. Still, in both scenarios, the proximity to friends and family may be important to women. Interestingly, men are more likely to cite retirement as a reason to purchase at 7% compared to women at just 4%.
One potential reason single women outperform single men purchasing homes is due to who is living in the home. Single women are more likely to have children under the age of 18 in the home and more likely to purchase a multigenerational home. Women may value the stability of homeownership in both scenarios. For instance, she knows where a child will attend school and would not need to risk moving homes and moving schools if the rent increases. She also knows what her home expenses will be, while she may have young adults who boomeranged back or could have elderly relatives in her home.
The second major question posed is finances. Women home buyers typically purchase a home as a first-time buyer at a household income of $69,600 compared to single men at $83,800. While male incomes do not match that of married couples or unmarried couples, their higher incomes do allow them more buying power than single women buyers. This is especially important when thinking of the difficulties of housing affordability. This may be one reason why the age of a single woman as a first-time buyer is a median of 38 while men have a median age of 33 as first-time buyers.
Given lower household incomes, women do make more financial sacrifices when purchasing. Forty-five percent of women make financial sacrifices compared to 40% of men who purchase homes. Common financial sacrifices include cutting spending on non-essential goods, entertainment, clothes, and even taking on a second job. These sacrifices only underscore how important homeownership is to women as these sacrifices outpace those of male buyers. As noted in a previous blog, women are also more likely to move in with friends or family before purchasing to avoid paying rent. These sacrifices may add up and happen over a number of years, which also may contribute to the slightly higher age.
One notable difference is the source of down payment. Savings and sale from the last home are the most common sources for both single men and single women. However, there are two notable differences. Men use savings at higher rates while women use sale of their last home at a higher rate. Men are also more likely to sell stock or bonds, use their IRA, cryptocurrency, or take a loan from their 401k/retirement at 20% compared to women at 15%. Whereas 13% of single women use a gift from a friend or relative for their down payment compared to 11% of single men.
The Bias You May Encounter Today as a Single Female Home Buyer
While it is illegal for lenders to discriminate against women who are pregnant, in the past some lenders have tried to deny loans to pregnant women by claiming their pregnancy is a disability, or that income would be unstable due to a maternity leave.
Single women with children may also struggle with bias being seen as having additional expenses and less income coming in when compared to a married couple.
Bias can also exist from home sellers who may accept an offer from a traditional family with two incomes instead of a single female with one.
Bias can also come from family and friends who think they know what is best for you or have heard rumors about home buying that are just not true. You may hear things like "But you aren't married, how can you afford your own home by yourself?" or "It's impossible for single women to get qualified for a mortgage".
Tips to Navigate The Gender Bias When Buying a Home
Do your research. Knowledge is the key to maintaining equality through the home buying process. Find your real estate dream team to best represent you and your best interests. Ask questions and demand unbias pratices. There are many pieces to the puzzle when buying a home, and finding the right people in the right role is key. Seek out people on your real estate team who value gender equality while representing you throughout the entire process to home ownership.
Quick Tips to Prepare for Home Ownership
Crunch the Numbers
As a single woman buying a home, your mortgage payment will likely be your biggest expense, but you still need enough money left over at the end of the month to cover your other bills, including groceries, utilities, credit card balances, and car payments.
If you buy more house than you can afford, you may also be unable to save for long-term goals, like retirement and you may be forced to eliminate vacations and dinners out from your discretionary budget, which gets old in a hurry.
For guidance on how much you may be able to reasonably spend on housing, consider the 28 percent rule. Most financial professionals recommend that homebuyers allocate no more than 28 percent of their gross (pretax) monthly income toward housing-related costs, which include their mortgage payment, principal and interest payment, property taxes, insurance, and any housing association or condo fees they may be assessed. So someone making $5,000 per month would potentially spend a total of $1,400 on housing expenses each month without compromising other financial priorities.
Keep in mind that the 28 percent rule is not one-size-fits-all. The amount you may be able to spend may be more or less depending on your current debt level, income stability, and financial goals. The important takeaway is to set a financial limit that makes sense for you — and stick with it.
One helpful trick to keep your spending in check is to start looking at houses on the low end of your price range and work your way up. That way, you can call off the search at the lowest possible price point when you find what you’re after.
Explore Loan Options
For single buyers, including women buying their first home, the biggest hurdle they may face is affordability, since they must qualify for a mortgage based on their income alone. That’s become an even bigger challenge in recent years as low inventory levels have priced more single-income shoppers out of the market.
The other potential roadblock is coming up with the cash for a down payment. But don’t let that stop you from pursuing your dream. These days, you don’t necessarily have to come to the closing table with 20 percent down.
National, state, and local programs abound to help qualifying borrowers get into a home. Real Estate Agents and Lenders can give you advise on specific programs that you may qualify for.
Beware of the shady online lenders. Research the company you want to work with as your potential lender. There are many companies online that do not do their due dilligence when handling your paperwork properly. This can lead to some costly outcomes for you as a buyer, or hold up the process of getting you into your new home.
Be sure to comparison shop for a mortgage loan. Start by educating yourself about the fees and charges you may incur, including closing costs, points to lower the interest rate, and private mortgage insurance, (PMI). Hint: If you come to the closing table with less than a 20 percent down payment, many private lenders will charge PMI, an extra fee to compensate them for the higher likelihood that you may default on your loan.
Next, solicit mortgage loan estimates from multiple lenders, including your bank, credit union, mortgage brokers, and online lenders, which increases your bargaining power. To make it easier to compare offers, the Consumer Financial Protection Bureau recommends asking each lender for the same loan features, including term (or length of the loan) and down payment. Be sure the loan estimates clearly delineate whether the rate is fixed or adjustable, what the rate lock period is, whether prepayment penalties apply, and how much you may have to pay in points to lower your interest rate.
Make Your Dream Home Wishlist
Before attending open houses, make a checklist of needs versus wants. It will help keep you focused as you encounter nonessential amenities (like walk-in closets or farmhouse sinks) that might tempt you to compromise on your priorities. Those with children might put a playroom and a good school district on the top of their list. Others may need a spare bedroom to rent out for extra income, or an in-law suite if they are caring for elderly parents. And older buyers, of which there are many, may wish to narrow their search to a condo (to eliminate yard work) near public transportation and/or medical facilities.
The highest percentage of single female homebuyers in the NAR survey were older women. Roughly 21 percent were between the ages of 55 and 64; 22 percent were between ages 65 and 73; and 21 percent were ages 74 to 94.
All single buyers should also consider whether they have the skill set, resources, and/or desire to tackle a fixer-upper, which could potentially be more work than they bargained for.
Research Neighborhoods
If you’re moving to a new community, you will want to research the local area carefully, including the crime rate, commute time (if you work outside the home), health care facilities, public parks, community organizations, houses of worship (if that is a priority), and school system, regardless of whether you have children.
Home values in better school districts may appreciate more consistently, or at least hold their value when the housing market is soft.
You can also reach out to friends and family for recommendations on specific neighborhoods, talk to real estate agents for their insight, and ask locals for their perspective. You’ll most likely be living in your new digs for the foreseeable future, so vet your options carefully.