Why Single Women Build Less Equity in Homes than Men

Female homeowners are still earning less equity than their male counterparts, according to an August 2017 study by Redfin. The disparity remains because women still make less money than their male counterparts, put down a smaller down payment and often carry a higher student loan level, said Nela Richardson, a chief economist for Redfin.


The Seattle-based real estate brokerage examined 199,387 homes that were sold in 18 of the largest metros in 2012. In the five years following their purchase, women earned a median $171,313 of home equity compared to $186,403 of equity earned by men, or 8.1% less than men.

The gap in gender equity was the largest in Seattle, where women earned 6.3%, or $20,983, less equity over the five-year period. The second-largest gap occurred in Columbus, Ohio with 6.2% less, followed by 6.2% less in Baltimore, 6.0% less in San Francisco and 5.8% less in San Diego.

This phenomenon was reversed only in New Orleans, where women earned more home equity than males by 8%, or $8,784. The gap was narrower in Omaha, Neb., with women earning 0.5% less equity, Portland with 0.8% less, Denver with 2.0% less and Oakland, Calif., with 2.0% less.

The home equity was calculated by adding the initial equity from the down payment and the principal paid on the mortgage to the appreciation of the home since its purchase date. The appreciation was determined by subtracting the original purchase price of the home from the current estimate on Redfin’s website.

Mind the Gap

The workplace gender pay gap is one of the largest contributors and leads to women spending $25,000 less on homes than their male counterparts, Redfin’s analysis said. The more expensive homes were also more likely to be in better neighborhoods where the appreciation occurred faster.

The playing field could be evened out by more women owning homes, which remains the single largest factor for middle class employees to “create wealth over the long term,” she said.

Single women can create more home equity by shopping around for financing and saving for a larger down payment, which immediately gives them more equity in stable markets. A larger down payment usually means they can qualify for a lower interest rate on their mortgage.

Making an extra payment once a year or even paying a little extra each month means homeowners can pay down the principal instead of their interest much faster.

Women have more student loan debt than men, according to 2016 data from Credit Sesame, a San Francisco-based credit advice site, said CEO Adrian Nazari. The National Center of Education Statistics reported that in the fall of 2016, 11.7 million females attended college, compared to only 8.8 million males.

“Women have 21% more debt than men and this, coupled with making less than men, is putting women at a disadvantage when it comes to home buying,” he said.

Another major factor is that women tend to have lower credit scores than men, which means they are being offered higher-rate loans on their mortgages, which adds up quickly over 30 years. While men usually only have credit scores that are 10 to 20 points higher, the difference can put one gender into the prime category vs. and subprime credit categories.

“Combined with the lower income and higher debt experience, this means women are buying ‘less home’ because their money is going into interest to the bank instead of building equity, as part of the mortgage principal,” Nazari said.

~Ellen Chang, The Street



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