Women's Equality Day is August 26th. It's a day to look at how far we've come in fostering gender equality in the United States.
But it's also a day to recognize that we still have a long way to go. There's still a significant wage gap between American men and women, and opportunities to take part in many communities differ by gender.
The past decade has shown us much about the importance of having diverse perspectives in our communities, whether they're professional, academic, or financial.
What does this have to do with real estate investing?
That's what we wanted to find out. We surveyed over 650 people and asked them about various types of diversity in the real estate investing world.
Here's what they said.
- Men are more likely to buy REITs and women are more likely to own rental property.
- More than 1 in 4 women said that gender diversity is lacking or severely lacking in the real estate investing community.
- Almost 1 in 4 non-white respondents said that racial diversity is lacking or severely lacking in the real estate investing community.
- One-third of women feel that their gender affects their real estate investing opportunities and almost a quarter feel that it affects their returns.
- One-third of non-white respondents feel that their race affects their opportunities and just over one quarter feel that it affects their returns.
- Most respondents -- 37% -- said they're happy with the level of diversity in the real estate investing community.
- Most respondents were in favor of more early financial education for under-represented groups.
- Almost a third said that no action needs to be taken to improve diversity in the real estate investing community.
How women and men invest differently
In general, women and men invest in real estate using similar strategies.
Women were also less likely to invest in commercial real estate than men, and more likely to take part in house flipping.
Overall, however, answers were fairly similar between women and men.
Gender diversity in real estate investing
As you can see above, women were more likely to say that real estate investing is lacking or severely lacking in gender diversity -- 27% of women said this, while 19% of men agreed.
However, women were also more likely to say that real estate investing as a whole is somewhat or very gender-diverse. 25% of women gave this answer compared to 21% of men.
This is an interesting finding, and the only conclusion we can reasonably draw is that men were less likely to take a stance on the topic.
However, the fact that the respondents to this survey were only 21% female tells us that women were under-represented in the population that we surveyed.
Does this mean that there are significantly fewer women in real estate investing than men? It would seem that way, but we can't conclusively say so.
Racial diversity in real estate investing
Ratings on racial diversity were more clear than those on gender diversity. Because many different races and ethnicities were represented in our sample, we compared those respondents who chose "White / Caucasian" and those who chose another option.
39% of non-white respondents said that real estate investing is lacking or severely lacking in racial diversity, while 26% of white respondents agreed.
However, certain groups felt more strongly about this issue. For example, 62.96% of Black or African-American respondents said that racial diversity is lacking or severely lacking in the community.
The numbers were flipped among those who think that real estate investing is somewhat or very diverse: 10% of non-white respondents said this, as did 18% of white respondents.
However, that's still a very small number of people who think that real estate investing is a racially diverse field.
Other types of diversity
While we were primarily interested in gender and racial diversity for this survey, we also asked about other types. Here's how our respondents felt about these issues:
- Diversity of sexual orientation: 15.79% lacking or severely lacking, 14.11% somewhat or very diverse.
- Diversity of political opinion: 11.97% lacking or severely lacking, 18.26% somewhat or very diverse.
- Diversity of ability or abledness: 18.25% lacking or severely lacking, 20.09% somewhat or very diverse.
Again, we see the pattern that many people feel neutral or aren't sure about the levels of diversity in real estate investing. However, more people thought that the real estate investing world was doing at least okay in diversity of political opinion as well as diversity of ability or abledness.
Overall, however, we see a small group of people who say that real estate investing is a diverse field in any way.
Do gender and race affect real estate investing results?
We see that real estate investing isn't the most diverse field. Investors don't seem to be too concerned about it, but there are certainly some results that are cause for concern.
Now let's look at it from a financial perspective.
We asked investors if they thought their gender affected the real estate investing opportunities that were open to them and the returns they got from those opportunities. Here's what they said:
Over a third of women said that they feel their gender affects the opportunities they get, while 23% said it affects their returns.
Interestingly, a recent study by Goldsmith-Pinkham and Shue shows that women earn, on average, 1.5 percentage points less than men per year on housing returns. That gap is 8 percentage points when a reasonable rate of leverage is assumed. So it appears that gender does, in fact, affect returns.
We got similar responses when we asked about race:
This looks a lot like the numbers we saw when we asked about gender.
Again, however, some of the groups we surveyed felt a bit more strongly about the issue. 70.37% of Black or African-American real estate investors feel that their race affects their opportunities, while 55.56% feel the same about their real estate investing returns.
However, while only 8% of male respondents thought that their gender affected their investing opportunities, twice as many white respondents said their race affected their opportunities.
A bit over 10% of men and white respondents thought their gender or race affected their returns.
How people feel about diversity in real estate investing
We have a general idea of how diverse investors think the real estate world is. But how do they feel about that diversity (or lack thereof)? Do they think it needs to be addressed or would they rather it stay the way it is?
Most people in our survey, 37%, said they're happy with the level of diversity in real estate investing.
A slightly smaller group said the lack of diversity is an issue and that it needs to be addressed. As you might expect, this number goes up when you look at minority groups. For example, 66.67% of Black or African-American respondents said that the lack of diversity is an issue that needs to be addressed. This was the highest of any racial/ethnic group.
A small percentage of respondents -- less than 7% -- said that lack of diversity is an issue but that it doesn't need to be actively addressed.
Again, we see women saying that diversity is an issue more often than men. But they were also more likely to say that it doesn't need to be actively addressed.
What should we do about it?
While the real estate investing community could use many tactics to improve its diversity and the opportunities for non-white-male populations, we asked about a few specific options.
Most respondents were in favor of early financial education, including information on real estate investing, for under-represented groups. This option was especially popular among Black or African-American respondents -- 48.15% thought this was a good strategy for addressing diversity in the community.
Interestingly, the next-most-popular option was "I don't think we need to do anything to improve the diversity of the community," with almost a third of respondents choosing this option.
A much smaller number were in favor of government intervention, more clubs and associations, or more online content specifically geared toward under-represented groups.
What did we learn?
If there's one thing we can say about these survey results, it's that real estate investors are conflicted.
Initial results -- as well as the distribution of people who responded to our survey -- indicate that real estate investing is overwhelmingly white and male.
Women do seem to think that diversity in the field could use some work. But they were almost as likely to say that real estate is gender diverse as they were to say that it was lacking in diversity. And they were twice as likely as men to say that the community doesn't need to take action to improve diversity.
Racial and ethnic minorities generally spoke in a similar fashion. They think that real estate investing isn't a very diverse community, but they were split on what should be done about it (if anything).
Several respondents pointed out that online investing often means you don't know the gender or race of the people you're working with. This is a good point, and something we'll keep considering when it comes to diversity in real estate investing.
We also heard feedback from several respondents who said they hadn't thought of this issue before or that they'd like to learn more.
History shows that diverse backgrounds, personalities, and ideas help businesses (and investors) thrive. This is something we'll continue to think about, and we encourage you to do so, as well!
Millionacres distributed this survey via email to 655 subscribers of the Paydirt newsletter on August 7, 2020. While efforts were made to create a representative sample, there is variability in any sampling method, and no strict statistical testing was performed.
Respondents were 78% male, 21% female, and less than 1% non-binary. Responses from non-binary respondents were removed from gender-based analyses due to the low number of respondents.
67% of respondents identified as white / Caucasian, with smaller numbers of other racial groups.
13% of respondents were aspiring real estate investors that had not yet invested in any form of real estate. Responses from these respondents were removed from some questions, such as those about returns, to ensure that some questions were answered only by those with the experience to best answer them.
Some percentages may not total to 100% due to rounding.