The Housing Market: It’s a Woman’s Game (Especially If You’re Single!)

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Thinking about investing (or reinvesting) in real estate? wOw’s Jean Chatzky on what you should know if you’re shopping

Would you believe me if I told you that you might save the housing market? Okay, maybe not you, exactly — but certainly your peers. Women are quickly becoming a force in the market, according to the National Association of Realtors. Their 2010 Profile of Home Buyers and Sellers found that 20 percent of the year’s buyers were single women. Single men accounted for only 12 percent.

The reason for the discrepancy is tricky to nail down, but here are a few hypotheses: This recession’s layoffs hit men much harder than women (the New York Times reported in 2009 that 82% of the job losses had befallen men, largely due to their heavy presence in distressed industries like manufacturing and construction). Single women ages 22 to 30 with no children earn eight percent more than comparable men in the top 266 metropolitan areas, according to Reach Advisors. And Ron Clarke, the CEO of CENTURY 21 Alliance in Philadelphia, says that anecdotally, women tend to be better credit managers.

“We consistently see that single women have handled their past obligations much better than single men. They seem to be more focused on planning and more strategic in the financial decisions they make.” He says the segment accounts for about 20 to 25 percent of their buyer business on a regular basis, a trend that’s been going on for about five years but seems to have surged in the last two.

If you, too, have been thinking about getting in the game, now’s the time. Spring is when the bulk of homes go on the market. Here, what you should know while you’re shopping:

  • Location, location, location. It seems to be particularly important to women, for good reason. But don’t just look close to work, says Clarke. More and more, buyers are looking at purchasing near where they want to spend their relaxation time, rather than cutting down on commute. If you’re single and without children (and by the way, the NAR study included both never married and divorced women), this is largely self-explanatory – you likely want to be close to the action, so you can meet friends for drinks or dinner, or visit your coffee shop, without getting in the car. But there’s another reason for this, too: Resale value. Down the line, when you want to sell, buyers are going to want to be close to your city or town’s main attractions. “People want to drive home on Friday and enjoy their weekends without having to get in the car again,” says Clarke.
  • Think about the future. Maybe you never want to get married or have children. Maybe you do. When you buy a house, you need to consider these goals and think about whether you want something you can grow into. This is not the time to be flipping houses, so your five-year plan is important. That might mean going for two bedrooms instead of one, if your budget allows, or adding on an extra bathroom. You don’t have to put too much stock in this – if these trends tell us anything, there will likely be a younger version of you coming along in a few years, who will love your place for all the reasons you do – but it’s definitely something to consider.
  • Consider rental value. The single lifestyle also comes with an element of flexibility – you may get a job opportunity in another city, fall in love, who knows. So when you’re looking at a home, think about whether it has the potential to become a rental property down the line if you aren’t able to sell (is it close to amenities? Will your mortgage payment be much higher than rental prices on comparable properties?) “What we see a lot of people do is keep the property if they move and turn it into a rental. In most areas of the country, rental incomes are up, even though values have been a little depressed,” says Clarke. The quality of tenants also seems to be on the upswing, largely because so many people have been forced out of their homes by foreclosure. These people often make excellent tenants, they just weren’t able to afford their mortgages because of changing circumstances or an overextended budget.
  • Envision the upkeep. That huge lawn is gorgeous and great for summer barbecues. But do you want to mow it? Or can you afford to hire a lawn care service? Be sure to look at the upsides and the downsides of each property’s attributes. And unless you have a knack with a hammer, things are inevitably going to go wrong that you can’t, or don’t want to, fix. So start assembling your team by asking friends and neighbors for recommendations for services like plumbers, electricians and contractors. Or – and this is my advice, because it saves money – spend some time learning to do basic DIY jobs. There are tons of handy books out there, and even how-to videos on YouTube and eHow.
  • Don’t overspend. You have to remember, you’re going into this with a single income, which means a) I’d like you to have an emergency fund of at least nine months worth of expenses before you buy the house and b) you, like all home buyers, need to stay within your means. A mortgage lender will often approve you for more than you can reasonably afford. My rule of thumb is to keep your housing expenses at or under 35% of your budget. That includes your mortgage, but also money for repairs (which can average one percent of the home’s purchase price each year), taxes, utilities and insurance.

 

8 comments so far.

  1. avatar Baby Snooks says:

    In the old days the general rule was “2 times the annual gross income” in terms of determining which is probably still a good rule to follow. One few follow.  But should.  Most of course would still be priced out of the market in terms of “what they want” and while lenders are more cautious now than before most at some point will go back to looking at working magic with the numbers so people can buy what they want instead of what they can afford. The real problem at this point is that no one knows that they will have the same income in five years.

     
    Equity is all in real estate. And the more equity you have upfront the better. People fall into the trap of believing they would be better of applying the rent to a loan. Without realizing all the “hidden costs” they don’t pay with the rent. Taxes for one thing. Most would do better, even if prices start rising, to save those “hidden costs” for a year or two and try to put 25% down.  It lowers the loan amount, and the monthly payment, but also provides “instant equity.”

    • avatar D C says:

      We rent our home on the other side of town because we couldn’t sell it, and are living in a home closer to work that we rent.  I don’t understand those who say renters don’t pay taxes.  Maybe other people don’t do this, but we include our taxes in our house payment.  We also include insurance.  So our actual house payment is around 750, and we pay almost twice that per month, of which taxes and insurance come out.  So we charge close to our payment amount to the renters.  They are paying our taxes within their rent payment, and I have to assume we are doing the same thing with the home we rent.  Renters who live in apartments are paying taxes as well, the same way the home renters are.  Anybody who is not charging that amount to the renters would make me question their intelligence. 

      • avatar Baby Snooks says:

        It depends on where in the country you are but using your figures in general in Houston most who live in apartments are paying $750 a month in rent. Not $1,500,.  So they would be wise to save the other $750 for a hefty down payment. And some hefty equity when they do buy.  

        Houses have done well in the leasing market. But many of the tenants are former homeowners. Who would probably do better to lease an apartment. But stlll want a house. They can afford the $1,500 and could afford t when they were paying a mortage. It was the maintenance in many cases that did them in. And the sudden emergencies like an a/c or heat system needing replacing. And then a medical emergency wiped them out. 

        Not everyone is “breaking even” by leasing while they wait for the market to improve. Some lose a little each month.  And just hope there are no “maintenance emergencies.”

  2. avatar Chris Glass` says:

    Before you buy any house have it inspected by two different companies not affiliated with the realty agent or owner. It’s even better if one of the inspectors is not from the town you are buying in so there is no potential conflict of interest. Why two? Inspectors often specialize in looking for different trouble spots. One may focus on the foundation and miss the mold inside the walls from a water leak. Talk to the current neighbors to see what they know of any past issues. Don’t be afraid to climb around the attic and basement yourself with a flashlight. Try to get a home owners warranty to cover major repairs for the first year or two.

    Take a look at the rest of the neighborhood as well as how the immediate neighbors keep up their properties. Check with the city and county to see how surrounding properties are zoned for future use. You don’t want to buy that charming house near the corner only to find you will have a fast food or box store near you in a changing neighborhood.

    • avatar Baby Snooks says:

      So many people believe a cursory inspection is all you need along with the Seller’s Disclosure and a Home Warranty.  The cursory inspection is basically a “visual inspection” and misses what can’t be seen. Your advice of having two inspectors is good advice but the best advice is to be willing to pay a good inspector who will do a thorough inspection. If you can afford to, hire a foundation person to inspect  the foundation. AN HVAC person to inspect the heating and coolling system.  A plumber for the plumbing. An electrician for the wiring. They are only going to look at one system. But will look more closely.  Talking to the neighbors is good too.  Check with FEMA. If the neighborhood has ever flooded, common in many areas, it’s worth the money to hire a nmold remediation company. The list is endless. But worth it.

      Seller Disclosures protect you only if you can prove they knew when they signed it.  Home Warranty policies don’t always cover what you think they do.

      First rule is don’t buy more than common sense tells you that you can afford. Regardless of what the loan officer tells you. Second rule is “Buyer Beware.”

      • avatar Chris Glass` says:

        We’ve made many corporate moves in the past usually renting before buying so we could get to know the new town. We learned the hard way that there is usually no recourse if the seller or real estate agent lies. Neighbors can be a wonderful source of information most won’t lie to someone with the potential to be a new neighbor. My husband is an engineer so he was pretty good at visual inspections. We backed that up by hiring a licensed bonded inspector to go over the homes we were interested in buying. Any seller that refused to let us do it didn’t get a bid.

    • avatar Lila says:

      Chris, your advice about looking at zoning and the surrounding area is right on. Hubby and I just went through a many-months-long property hunt, and one of the places we looked at was really great… expensive, too… but it turned out that that whole area has been surveyed by the county to put in a new road and bring in commercial development. It won’t be any time soon, but if that is to be our retirement dream home, it WOULD happen while we lived there. No desire to have Wal-Mart move in next to us, or to have some new high-traffic road roaring along in our back yard.

      The reason for the high price was that the seller thought he could attract a developer who wanted to take advantage of the future commercial potential. We scratched it off our list…

      • avatar Chris Glass` says:

        Lila, I think the zoning issue is one of the most overlooked in real estate. Another issue to consider is schools and athletic fields or venues. You might find your street becomes a public parking lot when a game is held.