Study by Scholars at Yale University Finds a Gender Gap in Returns on Investments in Housing

Home ownership is the biggest generator of wealth in the United States. A new study from the National Bureau of Economic Research authored by Paul Goldsmith-Pinkham and Kelly Shue of the Yale School of Management, shows that women do not generate as much wealth as men when investing in housing.

Researchers examined 50 million housing transactions and matched property listings across the United States from 1991 to 2017. For approximately 9 million of these transactions, the researchers were able to identify homeowner gender as well as the initial purchase and eventual sale prices. With this data, the authors were able to compute the homeowner’s annualized realized return on investment.

The results showed that single men earn 1.5 percentage points higher unlevered annualized returns relative to single women. The authors note that approximately 45 percent of this gender gap in raw housing returns can explained by market timing, i.e., the choice of where and when to buy, and when to sell. Women earn lower returns on housing partly because they tend to buy in locations when aggregate house prices are high and sell when they are low. However, a large gender gap persists even after accounting for market timing. Among men and women who buy and sell in the same zip code and in the same month and year, women still earned 0.8 percentage points lower annual returns on their investment in a home.

The authors stated that “the gender gap in housing returns arises because of gender differences in the location and timing of transactions, choice of initial list price, and negotiated discount relative to the list price. Women negotiate smaller discounts relative to the list price when buying and offer larger discounts when selling.”

The researches conclude that “this gender gap is an important contributor to gender differences in wealth accumulation, given that housing wealth represents the dominant form of savings for most U.S. households.”

The full study, “The Gender Gap in Housing Returns,” may be accessed here.

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