Are Men Or Women More Likely To Invest In Real Estate?
Finance and Investing has long been thought of as a man’s world. If you had to take a guess what percent of real estate investors are women what would you say? You probably would think something around 50/50 – maybe slightly skewed towards men so 60/40. If you thought that then you would be wrong. The current statistics show that women only make up only about 30% of real estate investors. The numbers are similar across other asset classes – S&P global notes that only about 26% of women participate in the stock market. It seems like there is a problem here. How do we define it?
What Is the Gender Investing Gap In Real Estate?
You may have heard about the gender pay gap, but have you heard about the Gender Investing Gap? Let’s start on a common ground here – the more commonly known and talked about gender pay gap.
According to the US Department of Labor women make about 82 cents for every dollar a man made in 2020. That means, assuming all other things are equal and women invest at the same level as men, that is 18 cents less of investing power per dollar that a woman has compared to what a man will have at his disposal to invest. 18 cents may not sound like a lot but when it comes to real estate investing, this is a long-term venture.
Wealth is built over the long term and compounds over time. If a man and a woman both make a similar investment of $10,000 and $8,200, respectively and make no additional investments afterwards the difference starts to grow in magnitude. After 10 years, assuming an 8% average growth rate the man would have $21,589.25 and the woman $17,703.18. This is now a difference of $3,886.07 compared to the original difference of $1,800. The gap has more than doubled!
The Gender Investing Gap however doesn’t just stem from lack of resources and lower pay but rather the fact that women are less likely to invest in general, and in real estate specifically, than men. This may be due to the gender pay gap, social biases, insecurities, gender role expectations, stereotypes around real estate investors, the heavily relationship-based nature of the industry amongst many other factors. It may be hard to pin-point one specific factor, but it is clear women are currently underrepresented in the real estate investing space.
How Do We Overcome The Gender Investing Gap In Real Estate?
There are 3 main prongs that can not only increase the participation of women in real estate investing but also set women up to be successful. The Real Estate Gender Investing Gap can be overcome with increased education, more socialization and earlier socialization of real estate investing and intentional inclusion.
Education is the key to allowing individuals to feel confident in acting in something new. Education also increases the chance that the person will have success. As more women are encouraged and empowered to educate themselves about real estate investing there will be the natural next steps of acting.
More Socialization and Earlier Socialization of Real Estate Investing
If there are more female real estate investor role models that are put into the spotlight women will see this template for success and be inspired to invest. The solution not only lies in making women who are currently of investing age to be more comfortable in the real estate space but also preparing the future generations of female investors. Current real estate investors (both male and female) should have more conversations with other women in their social networks and younger women and girls whether it be their family or friends. If girls start having conversations about investing at a young age, then they will operate with fluency once they become women. This will also change the image of real estate investing from being a male focused realm and become one that is expected to include women.
Intentionality is the act of those who currently have power and influence in the real estate investing world (whether that be internationally or just your social circle) taking proactive steps to grow the female investor base. This may be through mentorships, development of programs, providing referrals and connections and any other step that could help foster an environment for building the population of female real estate investors.
Why Are Women Better Real Estate Investors?
I’m not here to pick sides but there is some merit to the argument that if women would just invest, they would be as successful or maybe even more successful than men. A study by Fidelity showed that women tend to be better at planning and thinking “holistically” when they invest. They will come to the table with patience and make more conservative investments than their male counterparts. With this investing philosophy and the higher savings rate that women typically have, Fidelity found that their female clients were earning higher returns than their male clients.
This study is heavily geared towards the stock market however these principles remain true. Women were able to see success in investing because of their general investment philosophies that diverged from a stereotypical male’s investing strategies. This speaks in terms of statistical averages of course so this isn’t a one size fits all conclusion. There is some insight in the fact that women are just now starting to increase their participation in the investing sphere. If they are able to perform well now when the odds are stacked against them, how would it be when the playing field is a bit more even?