Rising Salaries and Rental Costs

Woman in kitchen

Efforts to achieve gender equity in the workplace are fueling home sales. According to the National Association of Realtors’ latest survey of buyers and sellers, single women are now the second-largest group of Americans buying homes. That’s 18 percent of the homeowning population, up more than 10 percent from the early 1980s. Demographically, single women buying the most homes are baby boomers, but women age 37 and younger are also eager to purchase a piece of the American dream.

Though downsizing and marrying later may play a role, much of this trend is attributed to progress in the employment arena. While a wage gap still exists between women and men, women are earning higher salaries and controlling more wealth than ever before. And many are seeking investment opportunities.

According to Julio Rios, vice president of mortgage lending at UW Credit Union, a home can be a smart investment for many people, including single women seeking financial stability. “The equity you build by owning a home can be a valuable resource when you want to retire or if you experience a financial emergency,” he says. “It’s good to have that cushion if you’re living on one income. It can help you if you lose your job or have a big expense, like a medical bill.”

Homeownership is also a way to escape rising rents, which can consume much of a single person’s budget. Researchers at the University of Wisconsin–Madison say there’s a sizable affordability gap in Dane County’s rental housing market. This means there aren’t enough available units that rent for less than 30 percent of the occupant’s income. With the monthly rent for a one-bedroom Madison apartment averaging $1,125, people earning an annual salary of $45,000 or less are at risk of living somewhere they can’t afford or being priced out of the market entirely.

In some cases, homeownership is a budget-friendly alternative. If a woman earning $45,000 a year purchased a home for $130,000 with a $7,000 down payment and a 30-year mortgage at a 4 percent interest rate, she might find herself in better circumstances than she would as a renter. Even with property taxes and private mortgage insurance, it’s possible for her total monthly housing costs to fall below $1,100. By spending less than 30 percent of her income on housing, she’d have an affordable housing situation. Plus, she’d amass equity and have a place of her very own.

Adding a mortgage to any monthly budget is big decision. According to Julio, it’s important that mortgage seekers are set up to succeed. For a mortgage loan officer, this means finding the right type of loan for the homebuyer’s financial situation, lifestyle, and goals. “If you’re buying a home on your own, it’s very important to have a monthly payment that’s manageable,” he says. “Our mortgage lending team makes sure homebuyers know how to plan for costs, such as property taxes and insurance, and that they don’t borrow more than they need. This puts them in the best possible position for the future.”

Tools, such as home-affordability calculators, can be helpful during the homebuying process, but there’s no substitute for one-on-one advice from a pro. Plus, learning about mortgages and equity can boost a buyer’s confidence when it’s time to make an offer. That’s why it’s important for mortgage loan officers to be strong and supportive educators.

“We want homebuyers to know they’re building a strong foundation for the future, and that we’re here to help them along the way at every stage of life,” Julio says. In other words, empowerment matters. And for many women, the most empowering way to enter the next stage of life is with the keys to a new home in hand.

Jessica Steinhoff is a senior copywriter with UW Credit Union, which offers educational seminars, credit consolidation consultations, and other services for homebuyers. For details, see uwcu.org/loans/home-loans .

UW Credit Union
3500 University Avenue
Madison, WI 53705