What do single women want? A home and a mortgage

These days more than one in five homebuyers is a single woman.

NORTH PALM BEACH, Fla. — Aug. 31, 2006 —  These days more than one in five homebuyers is a single woman.


Spurred on by a healthy real estate market, a variety of new loan options and more buying power than they had in the past, single women have become a powerful demographic in the real estate market.


"We saw the trend starting 10 years ago, and it became so common three to five years ago that we don’t notice it anymore," says Ron Phipps, broker with Phipps Realty in Warwick, R.I.


In 2005, 21 percent of all homebuyers were single females, up from 16 percent in 1993, and were the second-largest group of homebuyers, according to statistics from the National Association of Realtors.


"It’s a wonderful phenomenon," says Ilyce Glink, author of "100 Questions Every First-Time Buyer Should Ask." "There has been a real change in the sophistication of single women in response to their own money — they feel they can do it."


A long way, baby


It wasn’t always that way. In the 1950s and 1960s, single professional women had a hard time even getting a mortgage, says Richard Gaylord, Realtor with RE/MAX Real Estate Specialists in Long Beach, Calif., and first vice president of the National Association of Realtors. His mentor in the business — a woman — had to fight to get mortgages for her clients. And while it seems unthinkable now, he remembers her telling him that even with an independent, high-dollar income, banks worried, "what if she becomes pregnant and can’t work?" he says.


Glink recalls going to a bank with her husband in 1989 for a mortgage. She started talking about her paycheck and remembers being told, "Don’t worry honey, your income doesn’t even count," she says.


These days, mortgage lenders are actively courting single female customers. And many real estate agents and consumer finance gurus believe that the increasing number of different loan products is at least partially responsible for the trend.


With things like 5/1 adjustable-rate mortgages or new, no- or low-down payment loans, loans have become "more creative and more flexible," Glink says.


Thomas Stevens, president of the National Association of Realtors, agrees. "There are so many new loan products that where there’s a will, there’s a way," he says.


Other factors that may be helping are the large variety of home-improvement shows and the wealth of do-it-yourself products and seminars from big-box retailers.


"The modern media kind of reflects this," Glink says. "Women are seeing women who are out there buying and selling. It gives women a lot of confidence."


It’s creating "a ripple effect," says Rachel Drew, research analyst with the Joint Center for Housing Studies at Harvard University. "As more women are buying homes on their own, their friends are seeing that happen and saying, ‘Maybe I could buy a home.’"


But it’s not just younger women who are doing the buying — women of all ages are taking the homeownership plunge solo.


"It used to be younger professional women doing the buying," says Phipps, who says he’s now seeing more middle-aged women and seniors buying homes on their own. "We’re kind of seeing that become more common."


But, often they are not looking at the same homes, says Drew. Older women are likely to buy homes that are newer and more expensive. "They are more likely to have reserves from wealth accumulation," she says.


And that shows up in how they pay for the home, says Drew. Twenty-eight percent of women are able to buy a home without a mortgage, she says. (For single men the figure is 27 percent and for couples, 20 percent.)


But for most women, mortgages are a must. And 40 percent put down less than 5 percent for a down payment.


What do women want?


While it’s hard to generalize, real estate professionals have noticed that women, on the whole, seem to be looking for a home that is secure and free of maintenance worries.


Condos and town houses, in particular, seem to be a very popular solution. For solo female buyers, "condos and town homes are definitely more popular," Stevens says.


Looking at buying habits from 2000 to 2003, Drew found that condos made up 15 percent of the home purchases for single females, as opposed to 12 percent for single men and just 5 percent for couples.


Single women also are looking for smaller homes than their married counterparts, she says. One-third of single women purchased two-bedroom homes. By contrast, 84 percent of married couples purchase homes with three or more bedrooms.


"They are also more likely to own older homes," Drew says. "Part of it is price; part of it is location." Single women are more likely to buy near a city center where housing stock tends to be older.


And single women tend to be very practical in their requirements, according to statistics with the National Association of Realtors.


Single women, like single men, tend to be "more detached with the analysis" that goes into buying a home, says Phipps.


One for the money


For many women, buying a home is not simply about the shelter. A house is also a chance to get in on a great investment opportunity. For the past five years or so, the national real estate appreciation rate has been about 12 percent, says Stevens. Even though "that’s not normal," the 6 percent to 7 percent that real estate agents expect to see over the next few years is a tidy profit for homeowners.


"It’s still better than you can do with your money anywhere else," he says.


And many women are taking advantage of the opportunity to have a home and nest egg all in one.


"For a long time now, professional and nonprofessional women acknowledged the value of purchasing real estate as a wealth-building tool and an obvious financial strategy," says Phipps.


But a woman’s path to homeownership is not without its challenges.


Single women and men spend about the same for a home, with a median purchase price around $100,000, says Drew. But for single women, that will take a larger chunk of their paycheck.


Forty-three percent of women spend more than 30 percent of their income on their mortgage payments — a threshold Drew calls "cost-burdened."


Only 30 percent of single men and 25 percent of couples are spending that large a portion of their income on housing.


Doing the homework


The secret to a good buying experience is plenty of research.


Spend a little time online to get an idea of your own budget and what you can afford. Then start shopping neighborhoods.


At some point in the process, start talking with lenders and get prequalified for a mortgage, says Glink.


And don’t be afraid to wear out a little shoe leather. "Walk around the neighborhood on your own," she says. While you’re there, take notice of the agents who are active in the area.


If you can narrow your search to a couple of areas, "you’re ahead of the game," she says. "Homing in on a neighborhood is a plus, and knowing what you can afford is a big plus."


© 2006 Bankrate Inc.

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