LOS ANGELES, Calif. –Asian American-Pacific Islanders who own homes saw their greatest loss of equity following the national foreclosure crisis, despite their higher median income, according to a new study by the Asian Real Estate Association of America (AREAA) and the UCLA Asian American Studies Center.
While Asian Americans made some improvement in their rate of homeownership between 2005 and 2007, increasing from 59 percent to 60.3 percent, the study revealed that the national foreclosure crisis wiped out any modest improvements by 2008, returning the rate of homeownership by Asian Americans to 59 percent by 2009.
“The initial gains in homeownership for Asian Americans were lost during the current real estate downturn and it also exposed them to greater financial risk in terms of equity loss,” said Kenneth Li, Chairman of AREAA.
“There is limited research on how Asian Americans fared during the subsequent foreclosure crisis, but preliminary assessments and anecdotal evidence indicate that they lost considerable ground,” said Melany De la Cruz-Viesca, assistant director of the UCLA Asian American Studies Center.
“Especially troubling is the loss in equity many Asian American homeowners face.”
The median property value of Asian American homeowners decreased from the start of the foreclosure crisis in 2007 into 2009. The property value loss of Asian Americans between 2007 and 2009 was -$42,900 and that figure for Native Hawaiians and Pacific Islanders (NHPI) was -$47,000. These figures compare to the national equity loss during that period at -$9,100. Much of the large differential in equity loss can be explained by the fact that Asian Americans and NHPIs are highly concentrated in geographic areas where the housing downturn was more severe than in the rest of the nation.
“This finding again reinforces AREAA’s longstanding concerns that Asian Americans are disproportionately affected by the housing bubble because of population concentrations in markets such as Los Angeles, Chicago and New York, where housing costs are high,” Li said.
Another factor affecting homeownership for AAPIs is their significant language barriers.
According to the study: “The lack of English language proficiency continues to be a significant barrier, if not the most significant barrier, to homeownership among Asian Americans.” Findings showed that 71 percent of Asian Americans speak a language other than English at home, compared with 20 percent of the total population. Additionally, 2009 data showed that 32 percent of Asian Americans “speak English less than very well” compared with nine percent of the total population.
“This is especially evident for AAPIs looking to obtain loan modification support,” Li said. “This study reinforces the need for AREAA, together with our industry partners, to create initiatives that make a true difference in addressing the language barrier to sustainable homeownership.”
The study sheds light on homeownership patterns in Asian American communities, and provides a mixed picture of how the foreclosure and economic crises are affecting Asian Americans. While the study showed that Asian Americans had far larger median household incomes than the total population ($73,745 for Asian Americans vs. $61,021 for the total population), it found that Asian Americans still lag behind the total population in terms of homeownership (59 percent homeownership among Asian Americans vs. 65.9 percent homeownership in the total population).
According to the 2008 Census, Asian Americans make up 5 percent of the total U.S. population. Asian American ethnic groups that have homeownership rates higher than the total Asian American percentage include Vietnamese (64 percent), Filipino (64 percent), Laotian (63 percent), Japanese (62 percent) and Chinese, including Taiwanese (62 percent).
Among Asian American ethnic groups, the highest percentages of people who speak English less than very well include Vietnamese (60 percent), Korean (59 percent), Chinese (56 percent) and Cambodian (55 percent). The report’s findings reinforce how the population is diverse, with many ethnic, cultural, language and religious groups, each with a unique history and experience.
The full text of the study, “Following the Path to Asian American Homeownership Report: An Analysis of the United States, California, New York, Texas, and Select U.S. Metropolitan Areas” by Melany De La Cruz-Viesca and Brian Chiu, can be found on AREAA’s website at www.areaa.org.
Founded in 2003, AREAA is a national professional trade organization dedicated to closing the homeownership gap facing the Asian Pacific American (APA) community. AREAA advocates for policy positions at the national level that will reduce homeownership barriers facing the APA community, and aims to increase business opportunities for mortgage and real estate professionals that serve the growing community.