The AAPI community is driving the local housing market in Washington, D.C., based on factors like cost and educational opportunity.

I’ve worked in the Washington, D.C., metro area for 20 years and have always appreciated the incredible diversity that is inherent here. According to U.S. Census reports, the Washington D.C. metro area, which extends into parts of Virginia and Maryland, is 43 percent white, 24 percent Black, 17 percent Hispanic and 11 percent Asian American, which, notably, is double the rate of the United States as a whole. 

If we look at the most recent inbound migration data across all races, we see that about 240,000 people moved into the area from another state in the last year, with approximately 60,000 coming from another country. Indeed, approximately 23 percent of residents here are foreign-born, with more than one-third from an Asian country. 

AAPI migration patterns

The Asian Real Estate Association of America’s most recent State of Asia Report provides additional context into current inbound migration patterns among the AAPI community.

AAPI moves from the East and West Coast, traditionally AAPI strongholds, continued in the past year. The Midwest saw its AAPI population grow by 40.5 percent between 2010 and 2022, while the South increased by 25.2 percent. The State of Asia America Report also found that Washington, D.C., Florida, and Virginia generated 56.9 percent of all AAPI inbound migration from 2010 to 2019.

According to the National Consumer Reporting Association, more than 50 percent of the area’s AAPI population in the area is “mortgage ready.” The group defines “mortgage-ready” as those 45-and-under without a current mortgage, with a credit score of 661-plus, a debt-to-income ratio not exceeding 25 percent and other factors. Despite being in a strong financial position, data show that just 7 percent of those mortgage-ready people can afford a home in the DC Metro area.

The median home sale price here is $654,000, which is a lot higher than the U.S. median price of $375,000, but it’s still significantly less than the $1.3 million price tag you’ll find in those major California cities or Manhattan.

To put that 7 percent in perspective, affordability in San Jose is 0.1 percent, San Francisco is .05 percent and Los Angeles is 2.2 percent. 

D.C. metro drivers: College students, foreign investors and multigenerational living

So let’s dig a little deeper into our local drivers here in the D.C. area. The allure of our nation’s capital is high: an excellent job market, great public transportation, highly walkable and bike-friendly, a rich history and culture, beautiful parks and nature. It’s also home to 17 colleges and universities, many of them highly desirable. Think Georgetown University, George Washington University, American University and Howard University. It’s also home to Gallaudet University, which caters to people who are deaf or hearing impaired.

As a result, we see a lot of inbound AAPI migration — both domestic and international — among college students and their families who invest in real estate in the area. Many are driven by a desire to feel like they belong and establish roots. For international families who move here while their children are in college, there is a strong job market in the IT sector as well as government contract jobs.

Another sector that we are seeing a lot of activity in is international investors using EB-5 visas to purchase homes in the United States as a way to gain permanent residency, particularly people from China, the Southeast Asian countries of Vietnam, Cambodia, Laos, Myanmar (Burma), Thailand and Singapore as well as India.

This immigrant investor program was created in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. EB-5 visa recipients must invest in a new commercial enterprise that creates jobs. As part of that endeavor, they also buy a home. 

When members of the AAPI community move to the D.C. area, we are seeing that multigenerational living is prevalent. This is attributed to several factors including families of college students relocating to the area, the pooling of resources to afford a home, traditionally “thin” credit due to a preference to pay in cash versus credit as well as the need for small business owners of cash-based income to have a co-signer on the mortgage. 

Managing mortgage readiness

We do work with many clients who have thin credit, helping them improve their credit score over the course of six months to a year to put them in a position to qualify for a mortgage. One of AREAA’s current key initiatives is lobbying the Federal Housing Authority for an alternative credit model.

According to AREAA, nearly 70 percent of AAPIs over the age of 18 are foreign-born and many come from cultures that promote the value of debt aversion, which is an unwillingness to take on debt, with a premium placed on paying for things outright.” AREAA believes that the use of alternative credit systems could help as many as 40 million American consumers. 

The current model considers a very narrow and outdated set of criteria that includes payment history, amounts owed, length of credit history, credit mix in use and new credit. The expanded alternative credit creates a more comprehensive model by also including rent payments, utility payments, and student loans. By allowing renters to build credit through alternative means, AAPIs would have access to better rates while being accepted for more loans. 

When people first move to the metro area, they initially want to be in Washington, D.C. proper and who can blame them? However, prices are higher in the city so many buyers opt for condos or townhomes. When they want more space, they move to Arlington and Alexandria, which are still very pricey markets due to their proximity to D.C.

The farther away from the city you go, the more affordable homes get. For that reason, there is a considerable amount of movement within the metro area.

As a whole, there are many interesting dynamics related to the AAPI community that are shaping and driving the local housing market. It’s an exciting time to be working in real estate and through my association with AREAA, I am highly invested in supporting AAPI homeownership in my community.

Thai Hung Nguyen is broker-owner of Better Homes and Gardens Real Estate Premier serving the Washington, D.C., metro area. Connect with him on Facebook and LinkedIn.

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