A new report revealed that single women are the largest homebuyers and get saddled with the highest loans, despite the fact that they are less likely to default than are single men.
Researchers at the Housing Finance Policy Center of the Urban Institute found that single women constitute the second largest market for real estate, ranging anywhere from 15 percent to 20 percent during the last four years. In contrast, single men bought 9 percent of homes in that same period. That’s double as many single women as single men who are mopping up the housing market, likely because single women "want to create a nest, be part of a community," according to Lottie Kendall, an agent with Today/Sotheby's International Realty in the San Francisco Bay area. "They're buying to fulfill a dream." Single men, on the other hand, are more interested in possible financial gain and tax deductions.
The Urban Institute study, conducted by Laurie Goodman, co-director of the Housing Finance Policy Center, and Jun Zhu, a senior research associate, documented that single women tend to make larger down payments and are more likely to repay their mortgage than single men. In the prime boom times of 2004 to 2007, and in the housing bust of 2008 to 2010, single women defaulted at 0.8 percent and 0.1 percent lower rates than single men, although they earn a median lower income, have more debt, and are more likely to live in lower income areas.
Their impressive behavior goes punished.
In September 2016, Goodman and Zhu consulted a Federal Government database of mortgage transactions and proprietary loan-level data from CoreLogic, an analytics firm, and found that single women, on average, pay higher loans than single men. Worse still, single women are more often denied mortgages than single men, despite their superior payment performance.
In all cases, this is because single women come across as less confident borrowers at the lending stage and, so, exit with subprime or higher-cost financing. Goodman and Zhu argued that “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."
Behavioral science brings a shaft of research that shows that women, generally, ask for 30 percent less money than men do when negotiating. This "confidence gap" may come from hormones or nurture, but either way, women suffer. For them to negotiate better, Katty Kay and Claire Shipman, authors of Womenomics, say:
Women need to stop thinking so much and just act…. Almost daily, new evidence emerges of just how much our brains can change over the course of our lives, in response to shifting thought patterns and behavior. If we keep at it, if we channel our talent for hard work, we can make our brains more confidence-prone.
Otherwise, single women will continue to pay more for mortgages than single men do.
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