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.