In a November 2022 blog post on the value of homeownership, the United States Department of Treasury noted that “the benefits have largely been perceived to outweigh the costs” to households and to the U.S. economy. To be clear, Treasury states, “(t)he benefits from homeownership have not been shared equally.”

The disparities in homeownership rates are well known: the homeownership rate for White households is 75%, while for Black families it is about 45%. In this piece, we will explore another aspect of this disparity, through data detailing the homeownership rates for Asian American and Pacific Islander (AAPI) households. Like all large demographic groups, AAPI households are diverse, and their financial and economic outcomes reflect many factors. Homeownership rates reflect these, too.

The homeownership rate for Asian Americans is approximately 61%, slightly less than the national rate of 65%. Within the AAPI community, the ranges are broad. Approximately 47% of Bangladeshi Americans, for example, are homeowners while about 69% of Taiwanese Americans own their own homes. This is not surprising, as Taiwanese Americans have among the highest incomes in the AAPI community, a median income significantly higher than that of the typical American household. Bangladeshi families have median incomes lower than the national figure. Yet another relatively high-income group, Indian Americans, experience homeownership rates slightly lower than AAPI families, and less than the national homeownership rate. It’s important for policymakers, community leaders, and the financial services industry to learn why these differences exist. 

It is reasonable to try to connect higher incomes to higher rates of homeownership, and higher rates of homeownership to higher household wealth. This is problematic. Multiple factors contribute to a family’s ability to purchase a home and to a home’s appreciation and wealth-building.

Becoming a homeowner does not guarantee a clear path to wealth accumulation. How, when, and where one becomes a homeowner determines the home’s wealth accumulation. Younger homeowners have more time to accumulate housing wealth, weather crises, and buy more expensive homes in the future. A new homeowner from 2007 may have lost considerable wealth after the Great Recession. Access to safe and fair financial products is determinative. Finally, some housing markets simply experience greater appreciation than others.

In a review of AAPI homeownership data from around the time of the 2008 financial crisis to 2021, the Black Wealth Data Center revealed trends that should interest lenders, policymakers, and community leaders. The national median income for Asian Americans grew by over 40% (in inflation-adjusted dollars) in the decade or so following 2008, the nadir of the economic collapse. Yet, homeownership rates for this large and dynamic group barely grew at all, rising from 59% to about 61%. Some of this, as for most groups, is explained by the drop in homeownership after the crisis and a modest recovery since. While some AAPI subgroups, such as Korean Americans, have seen meaningful increases in homeownership attainment, others have not.

There are a few areas worthy of further exploration. Is there a connection between housing supply and homeownership attainment by certain demographic groups? How do appraisal biases impact AAPI purchasers? Has steering towards certain housing markets or mortgage products negatively impacted Asian-American families? Has the lack of mortgage product innovation hurt AAPI house buyers, for example, by relying on traditional underwriting and credit scoring, which may no longer meet the market’s needs?

We need clear responses if we truly want to expand homeownership for all. In a 2017 evaluation of housing credit standards in the wake of the Great Recession, the Urban Institute found lenders needlessly pulled back from lending to those with less than “perfect” credit, resulting in a loss of millions of new homeowners in the 2010s. Poorly designed mortgage products and shady business practices triggered the crisis of 15 years ago, not responsible borrowers with less than ideal credit. Quite simply, the market’s response to 2007 harmed the financial futures of millions, including many Asian Americans.

Designing a credit market that underwrites to borrowers’ realities and risks means elevating nontraditional credit factors, language access, and strong local lenders with connections to both the communities they serve and the financial systems they rely upon. The next generation of homeowners depends on it.

This blog is part of a series on Homeownership and the Racial Wealth Divide. Check out part one of our series here: 

Despite “New” Great Migration, Little Increase in Black Homeownership Rates