The Housing Scene by Lew Sichelman

Male vs. Female: An Uneven Playing Field

The pandemic has hit women harder than men -- you might call it a “she-cession.” To be sure, more women have lost their jobs during this time. Even so, more women are buying houses.

The Redfin brokerage chain says single women purchased 8.7% more homes in the fourth quarter of 2020 than in the same period a year earlier. That’s a larger increase than single men, who purchased 4.6% more homes in the fourth quarter than a year earlier.

Overall, single women accounted for 15.7% of all home purchases nationwide in the fourth quarter of 2020, Redfin reports.

None of this should come as a surprise. LendingTree says single women have long owned more homes than their male counterparts. But while women continue to widen the gap, they are paying a steep price to do so.

According to a recent study from the Yale School of Management, single women pay 2% more than single men for the very same house. And when the time comes to move, they sell for 2% less.

On a $300,000 house, that combined 4% swing equals $12,000 if there is no appreciation. But if their houses rise in value, as many are doing right now, the difference could be much larger.

And when you consider that by LendingTree’s count, unmarried women own nearly 1.6 million more houses than men in the nation’s 50 largest markets -- the company could not find a single one of the top 50 markets where single men own more homes than single women -- that’s a lot of money single women are missing out on.

Indeed, according to the Yale study’s authors, Kelly Shue and Paul Goldsmith-Pinkham, single women are losing about $1,370 per year relative to men because they tend to buy high and sell low. And that, they say, is a conservative estimate.

Shue and Goldsmith-Pinkham, both of whom are finance professors at Yale, base their findings on 9 million transactions throughout the country for which they could identify gender, the initial purchase price and the eventual sales price. The data stretches from 1991 to 2017.

If their research is on target, the amount of dollars women everywhere are losing is staggering. Overall, because Americans invest more in the housing market than in the stock market, the gender gap in housing is responsible for 30% of the gender gap in wealth accumulation at retirement, the authors argue.

The Yale study says the gender gap is “primarily explained” by market timing. But even when both sexes buy and sell in the same ZIP code, during the same month and year, women still net nearly 1% less than men.

Another factor is what happens between purchase and sale. Men tend to invest more in upgrades and maintenance, and they are inclined to invest in riskier properties that normally earn higher returns. Also, men tend to hold their houses longer.

But more importantly, say Shue and Goldsmith-Pinkham, women did not seem to negotiate as successfully as men. The authors discovered that male buyers and female sellers were associated with the largest negotiated discounts relative to list price. At the same time, male sellers and female buyers are associated with the smallest discounts.

The professors caution that they are “not necessarily” implying that women make bargaining mistakes or have lower negotiation skills. Indeed, they point out that previous research has found that women can experience more negative outcomes when they bargain aggressively.

But women search for their homes differently then men. “Women may equal men in negotiation ability,” the professors say, “(but) they care more about purchasing a particular home or derive greater utility from a fast, low-risk or nonconfrontational negotiation process.”

So what can women do to avoid losing money? When buying, they should align themselves with a so-called “buyer broker” -- an agent who works solely on a buyer’s behalf and never, ever works with sellers. These agents will negotiate for you, securing the best deal possible.

Don’t be fooled by agents who say they will act as a buyer broker in your case, but who also represent sellers in other instances. True buyer brokers say you can’t wear two hats, and maintain that it takes an entirely different mindset to represent buyers than sellers.

If you are a seller, look for an agent who is a top producer in your market. There’s a reason some agents consistently sell more houses than others. Beware your Aunt Tina, who just earned her real estate license. Sure, rookies have to start somewhere. But leave that to other clients.

Agents vary in skill and may not perfectly share the interests of their clients, the Yale economists point out. While the gender gap is not driven by women systematically choosing the worst agents, they say, it is possible the same agents offer different advice to men and women, or that the sexes follow the advice -- good or bad -- differently.

Beyond choosing the right agent, make sure you receive a market analysis showing the direction of prices as well as “comps,” which are details about the most recent sales of nearby, similar houses. Try to get a handle on the market before jumping in.