All the Single Ladies

 

Editor's Note: This article was originally featured in the September issue of MReport, available now.

As society evolves, so do the trends of homebuying. What was once seen as a rite of passage for married couples is now becoming increasingly more popular with singles and, in particular, single women.

Today’s women have higher levels of education than previous generations, and despite hurdles, such as the gender wage gap, single women are now the second-largest group of homebuyers after married couples.

With an independent mindset, stronger ties to financial assistance outside of marriage, and a higher need for solo parenting, the modern single woman is using this new set of cultural changes to buy homes at rates unseen before.

Looking Back

To fully understand why this is an issue of importance, it is wise to look back at America’s past, according to Dr. Amy Crews Cutts, Chief Economist at Equifax. The Civil Rights Act of 1964, for example, had a profound impact on race relations, but it also greatly influenced women’s rights, she said.

“Go back to the documentation of the time,” Crews Cutts said. “They put women as a protected class with the idea that it would derail legislation. So, women were a last minute add in.”

Despite the Civil Rights Act’s passage, things didn’t just change automatically—they evolved over time. When Freddie Mac was created in 1970, it was involved with this change by reforming its regulations, and the Enterprise was tasked with spotting bias in mortgage originations, Crews Cutts said.

Freddie Mac also created an advisory group called the Underwriting Barriers Outreach Group (UNBOG), which would gather on a regular basis, scour the underwriting guidelines page by page, and take out things that were deemed no longer necessary or overtly discriminatory. One of the things removed? How a woman’s income was tallied on a mortgage loan.

“So again, you go back to this very paternalistic society that we had prior to the Civil Rights Act, and the deal was that a woman’s income, if she was unmarried, was ‘Well, there’s no way she could possibly afford a home on her own,’” Crews Cutts said. “That was dead on arrival. But a married woman’s income would be heavily discounted, if it was counted at all, because even if she was working now, it’s very clear that she would quit working once she started having babies.”

This concept kept women out of financial transactions like homebuying for decades, but today, those traditional notions are a thing of the past.  Now, women can choose a different path.

Crews Cutts said more women are asking, “What do I want for myself and my financial future?” This idea can be a “liberating kind of thing,” she said.

A Present Picture 

Fast-forward to contemporary society, and women are still facing gender inequality. Women on average earn less than their male counterparts at just 94 cents to the male dollar, according to the Bureau of Labor Statistics.

Although the gender wage gap is far from coming to a close, according to the National Association of Realtors (NAR) 2017 Adult Composition of Home Buyer Households data, single females are buying homes at more than twice the rate of single males.

In fact, single women accounted for 17 percent of U.S. homebuyers in the last year, compared to just 7 percent of single men, according to NAR’s data. This housing gender gap has existed for some time, but it continues to widen for a variety of reasons.

Now, single females are more independent; common cultural assumptions about a woman’s desire for marriage, her place in the workforce, and the idea that a home purchase should follow marriage are quickly becoming outdated.

“Young women today have been raised with the expectation that any job is open to them—that they can choose when and how many children to have even into their 40s, even 50s,” Crews Cutts said. “And that they, in terms of credit availability and opportunity, can make choices for their own finances.”

So it’s not that women haven’t been capable. Women have been capable since forever. It’s American culture that has progressed and changed dramatically—and it’s opened the door of opportunity in the process.

Breaking Down the Factors

One of the biggest cultural changes is the idea that women are embracing independence and “singledom” lifestyles—a concept described by Bella DePaulo, author of “Singled Out” and Professor at the University of California at Santa Barbara.

According to DePaulo’s novel, single women are more likely to accept their situation than single men. A lot of older single women accept that they may never get married, and they’re more willing to move onward and upward with their lives. They’re not waiting for a spouse to buy their dream house.

Leonard Kiefer, Deputy Chief Economist at Freddie Mac, adds insight to that perspective. As societal normality’s become less traditional within this generation, the single woman market is more than likely going to continue to increase.

“The share of women living alone is much higher for younger generations than older generations,” Kiefer said. “As millennials take up a bigger share of the housing market, the share of single women buying homes is likely to rise.”

Though much of the industry is focused on the millennial buyer, a large share of the single-female homebuying population is actually much older than this coveted generation. According to Jessica Lautz, Managing Director of Survey Research and Communication at NAR, the median age of single-women homebuyers is 50 years old.

“I was actually surprised that older people are also big-time housebuyers, and people over 52 years old make up 26 percent of the homes bought,” said Dr. Eddie Seiler, Chief Economist at Summit Consulting. “These baby boomers or older people include divorcees and widows.”

This older set of single-family buyers could climb, too—especially when considering the disparity in the life expectancies of men and women. According to Seiler, the current average life expectancy of men is 76 years old, while the average woman lives to about 81 years old. As boomers age, this could put a whole new generation of single-female buyers on the map.

The Education Effect 

There was a time when college-educated females were virtually unheard of. Today, women are more educated than ever, and according to Selma Hepp, Chief Economist of Pacific Union, this rise in higher degrees is one of the biggest reasons for the single-women homebuying boom.

“It’s economics of marriage,” Hepp said. “One of the main drivers is that women are now more likely to have higher education than men and hence, be employed.”

According to data provided by Hepp from Women’s Policy Research, about 36 percent of women aged 25 to 34 years old—or those in the millennial generation—have a bachelor’s degree or higher, compared to about 28 percent of men in the same age group.

Mark Fleming, Chief Economist of First American, said this increasing education lends itself to higher income levels.

“As more women reap the benefits of their education, I would expect to see homebuying among this group increase,” Fleming said.

It’s likely to keep increasing, too. According to Hepp, women with higher degrees are less likely to marry men without similar education levels. The Bureau of Labor Statistics shows college-educated women are also less likely to be married in general.

A Helping Hand

While more education typically means higher incomes, that’s not the only way females are upping their financial security in lieu of marriage. According to Hepp, millennials and Gen Xers are also more likely to receive help from their parents for a down payment than previous generations were.

“This is due to the home equity wealth accumulation among baby boomers who are now in position to help their children and willing to do so,” Hepp said.

According to the 2016 Generations and Boomer Survey from the California Association of Realtors, 53 percent of boomers said they would help their kids with a down payment, while 24 percent said they already did.

“I think for any single buyer, and particularly women since they still earn less than men for the same job, buying alone can be especially challenging in the current environment where they may be competing against dual-income couples, cash buyers, investors, and other buyers who are less budget constrained,” Hepp said.

Because of this, single-women buyers may be more sensitive to changes in the interest rates. Fortunately, rates have been relatively favorable despite the Fed’s recent increases. Going forward though, if the rates increase notably, Hepp said the share of women buying alone could drop.

Solo Parenting

Women are significantly more likely to be single parents than their male counterparts—another influence likely pushing single-female homebuying upward, said Nela Richardson, Chief Economist at Redfin.

According to the U.S. Census Bureau, there were about 12 million single-parent households in the U.S. in 2016, and more than 80 percent of those had a female at the helm. Data provided by Seiler shows women are four times more likely to have a single-parent household than men.

Seiler said when people have children, they want to be more settled down and live in better areas, and that’s one of the reasons that this group is more motivated to buy homes.

“But, those shifting trends don’t mean that women don’t want their piece of the American dream,” Richardson said. “Women are embracing the single life, excelling in their careers, and feeling empowered to purchase a home on their own terms, without feeling like they need to be married first.”

What a Woman Wants 

What are these single females looking for in the housing market? According to Lautz, 20 percent of Americans have considered moving out of their local communities and into more affordable areas. Single-female buyers—and those who are watching their pocketbooks—might look to the Midwest and South areas, where home prices are more within reach.

“When single women purchase homes, they want the financial and psychological stability homeownership provides,” Lautz said. “For single-female homebuyers, affordability is key, as they are single-income earner households. Single-female buyers could be more attracted to areas that are out of city centers as they look for a home that fits her family’s needs.”

According to Hepp, the continually strong home price appreciation, which is due to lack of inventory, serves as a struggle for single women house hunting.

“There is not only the supply issue for women buying alone and increased competition from other buyers, but also price increases which may price them out of the markets where they would like to purchase,” she said.

No matter the reason behind it or the market that suits single women best, the ever-changing society continues to grow in favor of female independence. Looking back at the nation’s history and discovering from industry experts the reasons that are driving women to feel liberated provides knowledge and insight to the progressing industry. But for a simple explanation to the question, “Why are single women buying homes?” Just say, “Because they can.”