The effects of gender and marital status on mortgages don’t get a lot of research attention in real estate, but two new reports examine the exceptional role of single women in the home-purchase marketplace and the challenges they face in getting a loan.
A couple of highlights:
●Single women are statistically better at paying their mortgages than men — they default less often — yet they get charged more for their loans and are denied credit more often. Although they have lower incomes, on average, than single men, they tend to make larger down payments, according to researchers at the Housing Finance Policy Center of the Urban Institute.
●Single women are now the second-largest group of buyers in the marketplace, accounting for anywhere from 15 percent to more than 20 percent of all home purchases in recent years. Single men, by contrast, have accounted for about 9 percent of purchases since 2012.
Married buyers once represented more than four-fifths of the market, but that has declined over the past several decades. In 1985, married couples made 81 percent of all purchases; last year, it was 67 percent.
You might assume that unmarried couples have taken up the slack, but that’s not the case. Last year, according to a new research note titled “All the Single Ladies” by Jessica Lautz, managing director of survey research at the National Association of Realtors, unmarried partners accounted for just 7 percent of total sales.
The Urban Institute study, conducted by Laurie Goodman, co-director of the Housing Finance Policy Center, and Jun Zhu, a senior research associate, looked at a national database of mortgage transactions compiled by the federal government, along with proprietary information on borrower-credit characteristics and properties from CoreLogic, an analytics firm.
The study is blunt about its core conclusions: Single women pay slightly more for their mortgages, despite their superior repayment performance. They tend to present somewhat “weaker credit characteristics” at the application stage and, as a result, are more likely to end up with subprime, or higher-cost, financing.
But there’s an inequity in the system in light of women’s statistically lower rate of defaults: Single women “are paying too much” for their home loans. “Given that more than one-third of single women borrowers are minorities and almost half of them live in low-income communities,” the authors argue that in fairness, “we need to develop more robust and accurate measures of risk to ensure that we aren’t denying mortgages to women who are fully able to make good on their payments.”
Focusing on three distinct sets of years — 2004-2007, 2008-2010 and 2011-2014 — the researchers found that single women defaulted at lower rates than single men in all three periods, which represented sharply different economic environments. The years 2004-2007 were prime boom times; 2008-2010 encompassed the housing bust and global financial crisis; and 2011-2014 were post-recession recovery years.
Yet the pattern of lower rates of default exhibited by single women borrowers persisted through all three periods.
Although mortgage-lending groups have not had an opportunity to review or comment on the study — it had not been publicly released as of this writing, but it can now be found at tinyurl.com/hhe5859 — one lender with operations in eight states told me he sees single women not only as an important part of his business but also as a rapidly expanding one.
Joe Petrowsky, a mortgage consultant with Right Trac Financial Group, says 26 percent of his business is with single women, and “there’s no question” it will soon exceed 30 percent. He believes single women represent solid risks in part because “the reality is they have a better ability to save and plan for the future” than most single men.
Real estate agents say buying a condo or a house may have a stronger and deeper emotional component for single women than for men. Leslie White, a Redfin agent in the Washington area, told me that for single women, ownership of a house means “stability — you own it, you’re in charge, there is no landlord,” and that’s extremely important to them. Of White’s last 25 transactions, 20 percent were purchases by single women, zero by single men.
Lottie Kendall, an agent with Today/Sotheby’s International Realty in the San Francisco Bay area, says single women “want to create a nest, be part of a community. They’re buying to fulfill a dream,” whereas, in her experience, single men seem more interested in tax write-offs and possible financial gains than in stability.