Diversity is something we’re all paying more attention to lately. It isn’t just good for humanity — it’s good for business. While becoming a real estate agent has often been a good career for women, there is also a gender gap between women and men when it comes to commercial real estate, as well as a diversity and gender gap in real estate leadership positions.
One thing that we don’t discuss as often is diversity within real estate investing, and whether or not gender or race makes a difference when it comes to the opportunities investors receive.
Men and women invest differently
It may not be a surprise to know that in a Millionacres survey of over 650 people, real estate investment trusts (REITs) were the most popular choice of real estate investors. After all, access to REITs is as simple as opening a brokerage account and putting in money.
However, more men were involved in investing in REITs than women. Much of the stock investing information available, including REITs, tend to be marketed toward men.
But what was interesting was that more women were involved in rental property investing — the second most popular choice on the survey — than men. Women were also more likely to participate in house flipping than in commercial real estate. Part of this may be because we have so many women working as residential real estate agents.
The gender gap in commercial real estate isn’t just about employment, it’s also about salary. A recent survey conducted by the Commercial Real Estate Women Network found that women make 10.2 percent less than their male counterparts in salaried roles and 55.9 percent less in commission and bonuses.
The issue of opportunity
One of the biggest questions when looking at diversity is if people are being kept from opportunities and if it’s a level playing field. Certainly, the history of real estate investing has indicated that it hasn’t been equal in the past, and levels of Black homeownership indicate there’s a lot to do on that front.
In the Millionacres survey, almost one in four nonwhite respondents said that racial diversity is “lacking or severely lacking in the real estate investing community.” However, even more importantly, 33.7 percent of nonwhite respondents said that their race impacted their opportunities, and almost 27 percent said it impacted their returns.
This is important because while some people currently view real estate investing as a level playing field, many feel this is not the case. More than one in four women said that gender diversity is lacking or severely lacking in the real estate investing community. One-third of women feel their gender affects their real estate investment opportunities and almost a quarter feel that it affects their returns.
This is backed up by a study by Paul S. Goldsmith-Pinkham and Kelly Shue that shows that “women earn on average 1.5 percent less than men per year on housing returns.” According to the Millionacres survey, “that gap is 8 percent when a reasonable rate of leverage is assumed. So, it appears that gender does, in fact, affect returns.”
Who does this matter to?
One of the things we are learning as a culture is that solving questions of inequality doesn’t just matter to those who are on the receiving end of the injustice. And yet, many people feel it simply isn’t their problem.
Most respondents in the Millionacres survey said they were happy with the level of diversity in the real estate investing community or were unsure if diversity of either gender or race was an issue at all.
In fact, some survey respondents took issue with the question of diversity as a whole, saying that it was important not to promote “victimhood” and that opportunities such as investing in real estate stocks and crowdfunding were already available to all.
Such answers seem to ignore the role that education plays in determining who is aware of various ways to build wealth. Most respondents were in favor of more early financial education for underrepresented groups, and some were aware that access to capital is not always equal for all groups.
A study from Lending Tree using data from the Home Mortgage Disclosure Act found that “Black homebuyers were more likely to receive high-cost purchase loans” than the general population across 50 of the biggest cities in the United States. They are also less likely to receive mortgages. Similar patterns exist in real estate investing.
Many of the people surveyed by Millionacres said that investing success was only a question of money and work ethic. However, it bears noting that the responding audience to this survey was mostly white and male.
Racial and ethnic minorities who replied to the survey did think that “real estate investing isn’t a very diverse community, but they were split on what should be done about it.” Many think the onus is on the individual to overcome barriers rather than as a community as a whole to eliminate some of those obstacles.
What we don’t address, we can’t fix. Most of the popular real estate investing gurus online are white and male. Individual real estate investing associations can play a role in helping to foster diversity. Real estate agents and brokers are also necessary conduits in guiding their clients toward taking steps into real estate investing.
Deidre Woollard is the co-founder of Lion & Orb, a real estate public relations company. Follow her on Twitter @Deidre.