Asian Americans Post Largest Gains In Homeownership

Article Source: Forbes
Original Post Date: May 31, 2018

Asian Americans have seen the largest gains among any race in homeownership in the United States, new research shows.

recent report by Zillow Research found that the Asian homeownership rate increased 48%, from 10.1% in 1900 to 58.1% in 2016. This marks the largest jump in homeownership, compared to 23.2% among whites, 20.5% among blacks, and 5.4% among Latinos.

Overall, Asians have the second-highest ownership rate in the United States, below white households at 71.3% and above Hispanic and black households at 45.6% and 41%, respectively.

The research also found that in 2016, Asian home buyers had the most purchasing power, affording homes worth $155,000 more than the typical U.S. buyer. As a result, the Asian share of U.S. homes owned in 2016 (4.4%) was almost equivalent with their share of the U.S. population (5.6%). According to the U.S. Census Bureau, there are 21.4 million Asian Americans in the United States, and this population is expected to grow by 79% between 2000 and 2050.

Stephen Davey, COO of Asian Americans For Equality(AAFE), an organization that helps Asian immigrants find affordable housing and navigate the home buying market, said that cultural values and an immigrant mentality could be responsible for the high rates of homeownership among Asians.

“Family cooperation as a significant factor is our clients’ success in achieving homeownership,” Davey said via email. “Family pressure to help one another, added to the traditional new-immigrant attitude that puts a premium on seeking the security of owning your own home, is a strong combination.”

However, Gary Painter, a public policy professor at the University of South California who has studied housing market demographics extensively, noted that these homeownership numbers may be skewed due to a simple math calculation.

Homeownership is calculated by dividing the number of homes owned in the numerator with the number of homes owned and not owned (rented) in the denominator. But the data is not on a per capita basis. Asian American homeownership rates may be high partially because homeownership is measured at the household level.

“Many Asian households tend to live in multigenerational households at a higher rate, and it shows up as a higher homeownership rate,” he said.

Painter’s research revealed socioeconomic factors similar to those identified by AAFE that could explain why Asian homeownership rates in the United States are the highest among the minorities. Young Asian American adults were more likely to live in households with their parents before establishing financial independence, skipping the rental stage and jumping straight to home ownership, he said.

As for the explanation for Asian homeowners’ high buying power, Davey pointed to a “desire to limit the amount of borrowed funds” among Asian communities that often leads to family cooperation and significantly higher down payments when buying a home.

Painter has also conducted research on homeownership rates within the Asian American community when households are broken down by country of immigrant origin, which vary vastly culturally and linguistically.

Specifically, the research found that differences in homeownership among Asian Americans could mostly be explained by factors such as education, income and head of household numbers. However, there was one outlier in the group—Chinese Americans.

“We found that even after controlling for what part of China you came from, or another part of Asia, there still remained a higher homeownership among Chinese than other Asian groups,” Painter said.

The explanation for this could again be a higher tendency for nuclear familial living arrangements, as well cultural influence, community financial lending practices, and investment from immigrant families back home.