Does the gender wealth gap extend to real estate?

New York /
Mar.March 04, 2020 02:05 PM
 

The wealth gap between men and women appears to extend beyond wages – it’s in the real estate space.

Single women who buy real estate see 1.5 percent lower annual returns on their investment compared to their male counterparts, according to a recently published Yale study. The researchers analyzed U.S. transactions from 1991 to 2017.

The disparity comes down to purchase and sale prices. Single women pay about 2 percent more than single men when they buy a home and tend to get 2 percent less when they sell.

In terms of dollars for the median house price and median holding period with a 20 percent down payment, that’s about $1,600 in annual returns that single men see that single women do not.

There could be many reasons for the disparity. Gender bias may play a role in negotiations for purchases and sales, said researcher Kelly Shue, pointing to studies on car buying that found women didn’t get the same discounts that men when they used the exact same script during negotiations.

Market timing accounts for “a little bit less than half” of the gap, Shue said. Women are more likely to have dependents than men, which could restrict flexibility, the study found. The study found the gap is lessened if the holding period is longer.

Some women may be willing to pay more for particular homes compared to their male counterparts, although that doesn’t explain why the gap almost disappears in tight markets where negotiation is less a factor than a potential buyer’s price.

The data can help explain the wider gender gap in wealth accumulation at retirement. [Yale School of Management] – Dennis Lynch


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