Same-sex couples pay a premium to live in more liberal states

Homeowners in the top ten states with the highest share of same-sex couples are paying on average $116,730 more for their property than those in the ten states with the lowest percentage of LGBTQ+ households, according to a new LendingTree report. 

Vermont, Massachusetts and New Mexico have the highest shares of same-sex couples with 2.082%, 2.071% and 2.064%, respectively. Meanwhile, South Dakota has the lowest percentage, with only 0.726% of households occupied by same-sex couples. North Dakota and Idaho are tied as the second lowest with 0.774% each. 

“While you might expect same-sex couples have to pay a little bit more to live in a more accepting area, when you realize that it’s six digits more, I think it’s a little bit shocking at first glance,” said Jacob Channel, senior economist at LendingTree and the report’s author. 

The states with the greatest share of same-sex couples tend to be socially liberal states with large urban areas and are also the most expensive states like California, Massachusetts and Washington. This presents a disquieting reality for LGBTQ+ individuals: to live in more accepting societies, you have to pay a premium. Those who feel they have been discriminated against in housing due to their sexual orientation can file a complaint under the Fair Housing Act with the U.S. Department of Housing and Human Development. But some degree of legal protection is no match for community acceptance, which is a powerful driver in homebuyer decisions.

Almost a third of LGBTQ+ homebuyers said they moved to live in a more welcoming region, according to a 2018 Freddie Mac report focused on the LGBTQ+ community. It also found that 78% consider the LGBTQ+ friendliness of the neighborhood when purchasing a home. 

“An existing LGBT community is helpful as it gives a level of comfort in the community that they are not the only gays in the neighborhood, ” Jeff Berger, founder and CEO of the National Association of Gay & Lesbian Real Estate Professionals, said. However, as more same-sex couples have children, they look for neighborhoods with good schools, safe areas and proximity to their jobs, much like heterosexual couples. 

Statistically speaking, bisexual women are more likely to have lower incomes and to be the only earner in a household with children, said Lisa Herceg, director of business insights at the National Association of Realtors. To be accepted and comfortable, they move to urban areas, which tend to be more expensive. “Things get stacked up and stacked up with that particular group. So all that is making the current housing much more difficult for LGBTQ+ buyers in general.”

LGBTQ+ individuals face the same challenges as all other home buyers: lack of inventory and higher interest rates. Still, many also encounter discrimination from agents, sellers and lenders. Although it is not the norm, 13% of homeowners said they experience discrimination in the home buying process, according to the same Freddie Mac report. 

“You have agents that don’t feel comfortable working with the LGBTQ community. They may not show them all neighborhoods. They may steer them to other places, because they think that it’s, where they may want to live,” said Berger. In addition, discrimination can expand to sellers who might not want to sell their homes to members of the LGBTQ+ community or to lenders who might charge higher interest rates. 

Lenders can do a better job of serving this community by reaching out to ensure potential clients know that they will not be discriminated against and that the lender is a potential partner that can work with them, said Herceg. She added that it’s important for lenders to know the challenges same-sex couples face regarding where they can move to and feel genuinely comfortable that other buyers and sellers may not be up against. Personnel and training play a key role too, added Channel of LendingTree.

“It’s also making sure that the people who work for you that the person who’s in charge is originating a loan, or maybe an appraiser that the lender works with just being sure, that they’re aware of biases, and that they know how to check for those biases, he said. “Sometimes we do things subconsciously, we don’t realize that maybe we’re being discriminatory and I think that the more we’re aware that discrimination exists, the easier it is to recognize it and hopefully avoid it.”

The National Association of Realtors has training for members that examines implicit bias based on LGBTQ+ issues and race and ethnicity. And as Gen Z, 15% of which identifies as members of the community, becomes more prominent in the homebuying process, there will be more data to understand better and serve them. 

Channel hopes the report will spur more data collection and analysis regarding bias against marginalized groups in housing. This study covers only homeownership and its authors note that lower income LGBTQ+ individuals, particularly from marginalized groups, cannot afford to relocate to more expensive, liberal states. 

“The more data we have, the more accepting people are, we can start seeing people spread around the country and maybe don’t feel so compelled to move to these really high-cost areas, for no other reason than just they don’t want to be discriminated against,” Channel said.