Pay Equity Dynamics Should Help Close the Homeownership Gap: Analysis

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Diving Brief:

  • In the United States, women could afford 18% more homes for sale if they earned as much money as men, according to a recent analysis by Zillow. “Because owning a home is the primary means of creating wealth for most Americans, this disparity has an aggravating impact,” he says.
  • According to the researchers, this gap in access to property has other ramifications for women’s wealth. And when they buy: “Women’s financial return on buying the house is lower to the extent that women buy at a higher price and sell at a lower price,” said Kelly Shue, professor of finance at the Yale School of Management. .
  • That said, the overall gender pay gap is narrowing, which in turn should address the problem of home value disparities, the analysis concluded in part.

Overview of the dive:

Home ownership is the foundation of wealth creation for many people in the United States. Yet certain demographic groups continue to lag behind in this quest, even as overall homeownership rates are on the rise.

For example, the National Association of Realtors recently reported that the homeownership rate in the United States saw its largest annual increase on record in 2020, but white families remained homeowners at a much higher rate than Hispanic American, Asian American or Black families, with Black homeownership lower in 2020 than it was in 2010.

This is both a historical problem and an ongoing trend. Racial barriers have for decades prevented black families from having what many people consider a central part of the American Dream. Discriminatory practices such as redlining — in which the Federal Housing Administration refused to insure mortgages in or near black neighborhoods — have shaped racial wealth disparities and contributed to the homeownership gap, experts say. For the future, the Urban Institute predicted last year that over the next two decades, the biggest decline in homeownership rates will be for some black households.

For women, affordability and disparities in home value have negative impacts, Zillow’s analysis points out. Yale’s Shue detailed the women’s experience with the process of buying and selling a home. “If you’re thinking about buying a house, on average people are making money on their investment. [Women] were more likely to buy in places and during times when prices in general in a region were high, and they sold when prices in a region were low,” Shue said. “Over the past two decades, single men have done better in terms of timing and choosing where to buy and sell.”

And women, on average, are still paid less than men in the same jobs, and this lower pay makes it difficult for them to access available housing.

The size of this gap varies by job type: women working in finance, education, health services, advocacy and animal care experience larger disparities, analysis finds by Zillow.

It also depends on where a woman lives and works in the United States. Pay gaps in major metropolitan areas appear similar to the national gender pay ratio of 83%, according to a study of 2018 data from the American Association of University Women, with urban areas having on average slightly smaller gaps and rural areas larger gaps. The study found that the metropolitan area with the smallest gender pay gap was Miami, at 91%, and the largest was Detroit, at 72%. The largest average dollar gap between men’s and women’s median annual earnings was also found in Detroit, where men were paid $16,579 more per year than women.

Jun Zhu, a nonresident researcher at the Urban Institute’s Housing Finance Policy Center, noted that the gender pay gap is narrowing “but it’s not completely closed.” Zhu pointed to a few factors contributing to this momentum, including more women leading households and gaining economic power. Strategies that could help women buy a home include increasing the visibility and accessibility of homebuying resources, such as different types of down payment programs, Zhu said.

“If we can provide sufficient support for mortgage and down payment assistance, that will be a very good starting point,” Zhu said, adding that it will be “especially important” for women heads of households. who often have less income. and are first-generation homebuyers.

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