Thinking about investing (or reinvesting) in real estate? wOw’s Jean Chatzky on what you should know if you’re shopping

Would you believe me if I told you that you might save the housing market? Okay, maybe not you, exactly — but certainly your peers. Women are quickly becoming a force in the market, according to the National Association of Realtors. Their 2010 Profile of Home Buyers and Sellers found that 20 percent of the year’s buyers were single women. Single men accounted for only 12 percent.

The reason for the discrepancy is tricky to nail down, but here are a few hypotheses: This recession’s layoffs hit men much harder than women (the New York Times reported in 2009 that 82% of the job losses had befallen men, largely due to their heavy presence in distressed industries like manufacturing and construction). Single women ages 22 to 30 with no children earn eight percent more than comparable men in the top 266 metropolitan areas, according to Reach Advisors. And Ron Clarke, the CEO of CENTURY 21 Alliance in Philadelphia, says that anecdotally, women tend to be better credit managers.

“We consistently see that single women have handled their past obligations much better than single men. They seem to be more focused on planning and more strategic in the financial decisions they make.” He says the segment accounts for about 20 to 25 percent of their buyer business on a regular basis, a trend that’s been going on for about five years but seems to have surged in the last two.

If you, too, have been thinking about getting in the game, now’s the time. Spring is when the bulk of homes go on the market. Here, what you should know while you’re shopping:

  • Location, location, location. It seems to be particularly important to women, for good reason. But don’t just look close to work, says Clarke. More and more, buyers are looking at purchasing near where they want to spend their relaxation time, rather than cutting down on commute. If you’re single and without children (and by the way, the NAR study included both never married and divorced women), this is largely self-explanatory – you likely want to be close to the action, so you can meet friends for drinks or dinner, or visit your coffee shop, without getting in the car. But there’s another reason for this, too: Resale value. Down the line, when you want to sell, buyers are going to want to be close to your city or town’s main attractions. “People want to drive home on Friday and enjoy their weekends without having to get in the car again,” says Clarke.
  • Think about the future. Maybe you never want to get married or have children. Maybe you do. When you buy a house, you need to consider these goals and think about whether you want something you can grow into. This is not the time to be flipping houses, so your five-year plan is important. That might mean going for two bedrooms instead of one, if your budget allows, or adding on an extra bathroom. You don’t have to put too much stock in this – if these trends tell us anything, there will likely be a younger version of you coming along in a few years, who will love your place for all the reasons you do – but it’s definitely something to consider.
  • Consider rental value. The single lifestyle also comes with an element of flexibility – you may get a job opportunity in another city, fall in love, who knows. So when you’re looking at a home, think about whether it has the potential to become a rental property down the line if you aren’t able to sell (is it close to amenities? Will your mortgage payment be much higher than rental prices on comparable properties?) “What we see a lot of people do is keep the property if they move and turn it into a rental. In most areas of the country, rental incomes are up, even though values have been a little depressed,” says Clarke. The quality of tenants also seems to be on the upswing, largely because so many people have been forced out of their homes by foreclosure. These people often make excellent tenants, they just weren’t able to afford their mortgages because of changing circumstances or an overextended budget.
  • Envision the upkeep. That huge lawn is gorgeous and great for summer barbecues. But do you want to mow it? Or can you afford to hire a lawn care service? Be sure to look at the upsides and the downsides of each property’s attributes. And unless you have a knack with a hammer, things are inevitably going to go wrong that you can’t, or don’t want to, fix. So start assembling your team by asking friends and neighbors for recommendations for services like plumbers, electricians and contractors. Or – and this is my advice, because it saves money – spend some time learning to do basic DIY jobs. There are tons of handy books out there, and even how-to videos on YouTube and eHow.
  • Don’t overspend. You have to remember, you’re going into this with a single income, which means a) I’d like you to have an emergency fund of at least nine months worth of expenses before you buy the house and b) you, like all home buyers, need to stay within your means. A mortgage lender will often approve you for more than you can reasonably afford. My rule of thumb is to keep your housing expenses at or under 35% of your budget. That includes your mortgage, but also money for repairs (which can average one percent of the home’s purchase price each year), taxes, utilities and insurance.

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