Dream of buying a home gets harder for single mothers
Karlet Hewitt decided to make major lifestyle changes after experiencing the shocks of the pandemic: the income hit, the confinement, the view of the padlocked park through her third-floor apartment window. In February, Hewitt — a single mother to a 9-year-old boy — left Mount Vernon, New York, and headed south.
“The goal for me was to buy a home in North Carolina because it was a better market,” she said.
But Hewitt burned through a lot of her savings as she refocused her event planning business on virtual gatherings, all while home prices shot up.
“Now,” she said, “how does one even entertain this?”
Even without the benefit of a second earner, single mothers — those who have never married — have made up a growing share of homebuyers over the past three decades. Although they still lag behind single fathers and married couples, onequarter of single mothers were homeowners in 2019 — roughly double the rate in 1990, according to a recent report from the Urban Institute.
But the pandemic threatens to dampen that progress, experts said. Women have borne the brunt of the job losses over the last year and a half, while also shouldering most of the child care responsibilities — an acute challenge for single mothers, especially those with young children. At the same time, the housing market has grown highly competitive: Prices of single-family homes rose nearly 20% in August, the latest data available, from a year earlier, according to S&P CoreLogic CaseShiller’s National Home Price Index.
“COVID was definitely harder on some households, especially single women with children,” said Jun Zhu, a co-author of the Urban Institute report and a clinical assistant professor with the Finance Department at Indiana University. “It is possible the pandemic can undo that progress.”
Homeownership is often viewed as a sign of financial stability, with good reason: It ensures that housing costs remain predictable even as rents and inflation rise. And though homeownership is not risk-free, it generally provides a growing store of wealth that can be tapped later or passed on to the next generation.
“Homeownership is an extremely important part of people’s savings and wealth accumulation, especially for middle-income or median households,” said Kelly Shue, a professor of finance at the Yale School of Management.
Shue analyzed government survey data from 1989 through 2016 and found that, among households with median savings, homes accounted for 70% of single women’s wealth near retirement, compared with 50% for single men and roughly 60% for married couples.
“It’s important for all groups but especially for single women,” she said.
The pandemic, combined with the challenging market landscape, has eroded women’s confidence about their likelihood of becoming homeowners. Nearly 60% of single female heads of households who rent — those who never married, those who are separated or divorced, and widows — said they could not afford to buy and did not know if they ever would, according to a September study by Freddie Mac, the government-backed mortgage giant.
“It is really hard,” said Hewitt, 33, who said her events business was still struggling to regain its prepandemic momentum. She is focusing on stabilizing her income so she can rebuild her down-payment fund. That is a challenging prospect given the costs of rent; child care for her son, Adam; and student loan debt that now tops $109,000, although her payments are on hold.
“How do you make your way out of this?” she asked. “I am an optimist, but I don’t know.”
Single women accounted for 19% of homebuyers from July 2020 through June 2021, up from 18% in the preceding year, according to an analysis from the National Association of Realtors released Thursday. The slight increase is above prepandemic rates but may partly be a result of the decline in the number of Americans getting married, said Jessica Lautz, vice president of demographics and behavioral insights at the Realtors group.
“Women have a lot of headwinds right now,” she said. “We know they are buying on a lower income even as prices have increased and inventory has decreased.”
Single women buying their first home, for example, had a median household income of $58,300 in 2020, compared with $69,300 for their male counterparts, the association found. Single women tend to be older when they buy and spend less on their homes: The median age of first-time single female buyers was 34, compared with 31 for men, and women spent about 14% less.