Why Single Women Build Less Equity in Homes than Men

Female homeowners are still earning less equity than their male counterparts, according to an August 2017 study by Redfin. The disparity remains because women still make less money than their male counterparts, put down a smaller down payment and often carry a higher student loan level, said Nela Richardson, a chief economist for Redfin.

The Seattle-based real estate brokerage examined 199,387 homes that were sold in 18 of the largest metros in 2012. In the five years following their purchase, women earned a median $171,313 of home equity compared to $186,403 of equity earned by men, or 8.1% less than men.

The gap in gender equity was the largest in Seattle, where women earned 6.3%, or $20,983, less equity over the five-year period. The second-largest gap occurred in Columbus, Ohio with 6.2% less, followed by 6.2% less in Baltimore, 6.0% less in San Francisco and 5.8% less in San Diego.

This phenomenon was reversed only in New Orleans, where women earned more home equity than males by 8%, or $8,784. The gap was narrower in Omaha, Neb., with women earning 0.5% less equity, Portland with 0.8% less, Denver with 2.0% less and Oakland, Calif., with 2.0% less.

The home equity was calculated by adding the initial equity from the down payment and the principal paid on the mortgage to the appreciation of the home since its purchase date. The appreciation was determined by subtracting the original purchase price of the home from the current estimate on Redfin’s website.

Mind the Gap

The workplace gender pay gap is one of the largest contributors and leads to women spending $25,000 less on homes than their male counterparts, Redfin’s analysis said. The more expensive homes were also more likely to be in better neighborhoods where the appreciation occurred faster.

The playing field could be evened out by more women owning homes, which remains the single largest factor for middle class employees to “create wealth over the long term,” she said.

Single women can create more home equity by shopping around for financing and saving for a larger down payment, which immediately gives them more equity in stable markets. A larger down payment usually means they can qualify for a lower interest rate on their mortgage.

Making an extra payment once a year or even paying a little extra each month means homeowners can pay down the principal instead of their interest much faster.

Women have more student loan debt than men, according to 2016 data from Credit Sesame, a San Francisco-based credit advice site, said CEO Adrian Nazari. The National Center of Education Statistics reported that in the fall of 2016, 11.7 million females attended college, compared to only 8.8 million males.

“Women have 21% more debt than men and this, coupled with making less than men, is putting women at a disadvantage when it comes to home buying,” he said.

Another major factor is that women tend to have lower credit scores than men, which means they are being offered higher-rate loans on their mortgages, which adds up quickly over 30 years. While men usually only have credit scores that are 10 to 20 points higher, the difference can put one gender into the prime category vs. and subprime credit categories.

“Combined with the lower income and higher debt experience, this means women are buying ‘less home’ because their money is going into interest to the bank instead of building equity, as part of the mortgage principal,” Nazari said.

~Ellen Chang, The Street

Half of Seattle homes selling above list price

More than half the homes sold in Seattle last year–52.4% according to real estate website Zillow–were sold for more than the asking price. That’s an increase from 20.3 percent five years earlier. That’s the largest increase in any market that Zillow tracked.

The median amount paid above the list price was $21,000.

Nationwide, 24.1 percent of homes sold above asking price compared to 17.8 percent in 2012. The median amount paid above list price was $7,000.

Zillow cites strong demand, limited supply, and low-interest rates in the U.S. housing market, with a steady decline in inventory over the past three years.

The average home in Seattle sells in less than 50 days, according to Zillow. That’s faster than the nationwide average of 80 days.

“The typical buyer spends more than four months home shopping and has to make multiple offers before an offer is accepted,” Zillow said in a statement.

San Jose had the highest percentage of buyers who paid above price for homes — 68.5 percent — with the median amount spent at $62,000 over list price. San Francisco was second — 64.5 percent — and with the median amount spent at $41,000 over the list.

“In the booming tech capitals of the California Bay Area and Pacific Northwest, paying above list price is now the norm. In the face of historically tight inventory, buyers have had to be more aggressive in their offers,” Zillow Senior Economist Aaron Terrazas said in a statement. He added that he does not see the trend changing in 2018.

~Travis Pittman, King 5 News

Buying a home in 2018? Here’s what you need to know.

Homeownership can be a costly endeavor, especially since certain tax breaks are now less generous. Here are a few things to be aware of if you’re planning to go from renter to owner this year.

If you’re thinking of buying property this year, here are a few points you need to be aware of.

1. Your housing costs shouldn’t exceed 30% of your take-home pay

Regardless of how the recent tax changes end up impacting you, a homeowner’s housing costs should never exceed 30% of take-home pay. Different folks have their own interpretations of what peripheral expenses that 30% threshold should encompass, but at a minimum, it should cover known costs like property taxes and homeowner’s insurance. For better protection, however, I’d recommend that that 30% mark include maintenance, as well.

The typical U.S. homeowner spends anywhere from 1% to 4% of their home’s value on maintenance each year. If you’re buying for the first time, there’s no way to know where you’ll fall in that range, but if you aim for 2.5% — smack down the middle — and are looking at a $400,000 home, that’s roughly $833 per month in maintenance.

If you then take that $833 and add it to your monthly mortgage payment, property tax payment, and homeowner’s insurance payment, your total should not be greater than 30% of your monthly income. If it is, you’re leaving yourself with limited wiggle room for unplanned expenses that may arise in the future.

 

2. You can still deduct your mortgage interest — to a point

The mortgage-interest deduction has long been criticized for favoring the rich, and so some legislators have been arguing to eliminate it for years. Thankfully, this key deduction is still intact for the current tax year — albeit at a lower threshold.

It used to be that you could deduct interest on your mortgage for loans valued at up to $1 million. But as a result of the new tax changes, that limit has been lowered to $750,000. If you’re an average earner looking to buy a modest home, you should be able to deduct your mortgage interest in full. But if you’re looking at pricier homes, or live in an expensive area of the country where home prices are inflated, you may want to be more cognizant of that cap.

Of course, if you’re not planning to itemize on your tax return, there’s no need to worry about the mortgage interest deduction, or any deduction, for that matter. As it is, the majority of taxpayers don’t itemize, and since the new tax rules effectively double the standard deduction, it’s estimated that fewer filers will do so going forward. But if your intent is to itemize, then be aware of the aforementioned limit.

3. Your property tax deduction may be capped

Just as the new tax laws limit the mortgage interest deduction, so, too, do they limit the extent to which you can deduct property taxes. In fact, going forward, your total SALT (state and local tax) deduction maxes out at $10,000, whereas prior to 2018, it was unlimited. If you’re thinking of buying a home in a low- or no-income tax state, and you don’t expect your property tax bill to be particularly high, then the $10,000 cap won’t impact you. But if you’re buying a home in, say, New Jersey, which boasts the highest property taxes in the nation, you may come to find that a portion of your property tax bill is non-deductible.

Again, if you’re not planning to itemize on your tax return in the first place, then there’s no need to worry about this change. But one thing you should be aware of is that some experts say that home values may soon start to drop as a result of the new laws, since, by taking away a portion of the tax breaks buyers once enjoyed, they make ownership less affordable in some parts of the country.

If you’re buying a home because you plan to live there for quite some time, this may not be too concerning. But if your plan is to buy a home, flip it, and unload it in a year or so, prices could start to fall when more buyers see their tax breaks go down and their tax bills go up.

Buying a home can be a wise financial decision that serves you well, not only at present, but for many years to come. Just be sure to know what you’re getting into before signing that mortgage.

~Maurie Backman, The Motley Fool

Can Seattle’s Real Estate Market Keep Up This Growth?

If Seattle’s real estate market is going to slow down over the next year, will it be a burst or a dribble?

That’s the question on a lot of analysts minds. According to the latest S&P Corelogic Case-Shiller home price index, Seattle has lead the nation in home price increases for  14 months in a row.

The only relief buyers seem to get is a holiday slowdown, and even that is fairly short-lived: Adjusted for seasonal changes, prices grew 0.6 percent from the month prior, according to Case-Shiller, and the Northwest Multiple Listing Service report found that while both inventory and pending sales dipped to their lowest levels since April, prices still increased by double-digits in most of the 23 counties NWMLS serves.

While many brokers see the market growing at more than double the rate of the national average and think the boom is unsustainable in the next year, the question now is mostly whether Seattle will go out with a bang or just start to rise more gradually.

According to the NWMLS report, many brokers are seeing signs that Seattle is not a bubbling market.
“Prices are expected to see some much needed slowdown in 2018 which will help bring more balance to the market,” OB Jacobi, president of Windermere Real Estate, said. “Rising home prices on their own don’t lead to a bubble; a number of other factors have to come into play.”

But can Seattleites be expecting another 12.67 percent growth over last year? Probably not, is what most brokers hope, but so far there’s not much indication that Seattle is slowing down in the first part of 2018.

As one put it to the NWMLS, 2018 could be “less glamorous with 6-to-8 percent appreciation, or even a slight flattening of the market for 8-to-12 months.” But J. Lennox Scott, chairman and CEO of John L Scott Real Estate, “market conditions are set for another robust market in the year of 2018.”

~Zosha Millman, Seattle PI

The Best New Condo Project in Seattle Is Actually in Bellevue

Bosa Development just released new architectural details and renderings of the highly anticipated One88 condo project in Downtown Bellevue.

One88 will be the city’s first high-rise condominium community in nearly a decade, and it will also be the first project in the region for world-renowned architect Hossein Amanat. The 21 story luxury tower will feature 143 residences.

Bellevue, much like Seattle, has been starving for condo inventory. Its boutique, has an amazing location, will overlook Downtown Bellevue Park and has quite a bit of view protection for years to come.

According to a recent press release by One88:

“One88 will truly change the skyline of downtown Bellevue. It will not be an ordinary, cube-shaped tower, it will be a statement-making building with a different application of materials and shape that creates the appearance of movement,” said Amanat, principal of Amanat Architect. “The views of Lake Washington, the Cascades and the surrounding city also heavily influenced my design. I wanted to create a number of private and communal spaces that framed those views and bring the outdoors in.”

“One88 brings a new style of design and a new level of luxury to downtown Bellevue,” said Bemi Jauhal, director of sales and marketing for Bosa.“The demand for downtown’s vibrant urban lifestyle is growing and we feel the city is ready for an unique residential offering.”

“One 88 is located at the intersection of Bellevue Way Northeast and Northeast Second Street. One88 will be just a few steps from Downtown Park and a variety of dining and high-end shopping. Residences will have a range of views from Lake Washington, mountains, The Bellevue Skyline and more.

~ Urban Condo Spaces