Although the Asian American and Pacific Islander (AAPI) community has the highest homeownership rate among America’s racial minority groups (59.9 percent), that doesn’t mean there aren’t plenty of challenges standing in the way of AAPI homebuyers and sellers.
“Our analysis shows the Asian American homeownership gap persists, underscoring the significant racial disparities that still exist in real estate today,” Realtor.com Chief Economist Danielle Hale said in the portal’s AAPI homeownership report published on Friday. “Despite this community having some of the highest education and income levels in the country, many continue to face barriers.”
Like many others, AAPI homebuyers put their purchasing plans on hold at the beginning of the pandemic, with their home sales index (HSI) declining to 109.5 — 8.1 percent lower than their pre-pandemic levels and 9.5 percent lower than their non-Asian peers.
The HSI is calculated by using March 2019 as a benchmark in the number of home sales, and the index is the number of sales relative to March 2019, multiplied by 100, Realtor.com explained.
Although economic and public health uncertainties played a role, the disheartening rise in anti-Asian hate crimes was a contributing factor in AAPI homebuyers deciding to sideline their buying plans during the first half of 2020, Realtor.com said.
“The immense increase in anti-Asian crimes may have halted the home buying process for some,” the report reads. “Fears of being isolated from larger Asian American communities by moving to more affordable areas like smaller cities and the suburbs likely took otherwise viable options off of the table, derailing plans.”
“For example, between March and September 2020, 67 anti-Asian hate crime events were reported in California, the state with the highest Asian American population, a 139 percent increase from the same period in 2019,” it added.
By the end of the year; however, AAPI homebuyers rebounded. Between the fourth quarter of 2020 and Q4 2021, the homeownership rate of Asian American households increased from 59.5 percent to 61.2 percent, while all other racial groups saw homeownership rate declines over the same period.
Millennials and women were primarily responsible for the boom in AAPI homeownership, with AAPI millennials average HSI (159.1) outpacing buyers in the Gen X (148.9) Boomers (145.0) and Silent (145.5) generations.
“Between August 2020 and December 2021, Asian American homebuyers had an average HSI of 159, which translates to an average nearly 60 percent more buying activity compared to the March 2019 baseline,” the report reads. “In the same timeframe, non-Asian American millennial buyers had an average HSI of 144.4, a growth rate of less than 45 percent over their March 2019 baseline, lagging the improvement in Asian American millennials’ rate of homebuying by 9.2 percent).
Meanwhile, AAPI women’s average HSI (157) outpaced AAPI men by 8.0 percent between July 2020 and December 2021.
Although AAPI homebuyers gained some decisive ground in 2021, Hale said the sharp increase in home prices during the first quarter of 2022 resulted in a minimal — yet concerning — decrease in the AAPI homeownership rate.
“The homeownership rate for Asian, Native Hawaiian and Pacific Islanders (AAPI) actually dipped in the first quarter of 2022, slipping from both the previous quarter and the previous year,” she said. “While this dip was not large enough to be statistically significant, it is something we’ll watch carefully in the year ahead.”
“With mortgage rates climbing and AAPI households more concentrated in high-cost areas of the country, they could feel the impact of higher housing costs more acutely than buyers in other areas of the country,” she added.