Key Findings:
- Homeownership rates for Asian Americans are growing, up to 61.2% in 2021Q4, but homeownership still lags behind that of white Americans, 74.4% in the same period.
- Consistent with rising homeownership, our name-matched deeds data suggests a growing share of home sales to Asian Americans, 4.6% in 2021 compared to 3.7% 2020.
- Similar to findings for other studied groups, such as Hispanics and Blacks, home sales have grown more among millennial and female Asian Americans than their older or male counterparts.
Homeownership is a big part of the “American Dream” for Asian Americans in many ways. Owning a home is a sign of success and financial stability, but in many Asian cultures, it is also a significant commitment to the relationship among family members. While Asian people in the U.S. tend to have higher educational attainment and household income than any other racial and ethnical groups, their homeownership rate (59.9%) is much lower than the national rate of 65.5% and the white community rate of 74.4%. A recent study by CAPACDshows that language barriers in the buying process and the prevalence of multigenerational living, which often coincides with higher housing cost burdens, are among the challenges faced by Asian American households.
To honor the 2022 Asian American and Pacific Islander Heritage Month, Realtor.com took a broader view to understand how Asian American homebuyers have interacted with the housing market in recent years. In addition, we want to compare home sales trends between Asian American buyers and their non-Asian peers. We matched primary homebuyers’ last names using deed records with the Census’s last name origins to parse buyers’ ethnicity. In addition, we join primary buyers’ first names with gender and generational likelihood to make comparisons between different gender and generation groups among Asian American homebuyers.
Figure 1: Recent Homeownership Rate by Race
Asian Americans Homebuyers Pulled Back Early in the Pandemic But a Bigger Rebound Than Their Non-Asian Peers Followed
Figure 2 shows home buying trends among Asian American buyers and their peers between March 2019 and December 2021. The Home Sales Index (HSI) was calculated to compare home purchases by buyers relative to the group’s March 2019 purchasing behavior (set as an index of 100). Before the onset of the pandemic, Asian homebuyers grew at a faster pace than non-Asian buyers. The average Home Sales Index (HSI) for Asian American buyers between March 2019 and Feb 2020 was 118.3 , 3.1% higher than their peers.
However, the outbreak of the pandemic changed the trajectories of Asian American homebuyers. During the first half-year, the buying pace of Asian American homebuyers slowed significantly, ultimately lagging behind their non-Asian counterparts over this period. The average Asian American HSI dropped to 109.5, 8.1% lower than their pre-pandemic levels and 9.5% lower than their non-Asian peers. The immense increase in anti-Asian crimes may have halted the home buying process for some. 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% increase from the same period in 2019.
Even though Asian American homebuyers experienced significant challenges, they are the group that had the largest homeownership rate increase in recent years. For example, between 2020Q4 and 2021Q4, the homeownership rate of Asian American households increased from 59.5% to 61.2%, up 1.7 percentage points, while all other racial groups saw homeownership rate declines over the same period. Our name-matched deed records showed similar trends: the share of Asian American homebuyers among all buyers jumped from 3.7% (2020) to 4.6% (2021). In addition, Asian American homebuyers rebounded faster than non-Asian American peers after October 2020. The average HSI for Asian buyers jumped to 154 between October 2020 and December 2021, 30.8% higher than their pre-pandemic levels and 19.6% faster than non-Asian peers. One potential explanation for the strong rebound is that they have higher motivations to take advantage of the historically low mortgage rates. According to a recent financial study by the Consumer Financial Protection Bureau (CFPB), Asian American borrowers generally live in relatively expensive metro areas, resulting in higher average loan amounts than their peers. Therefore, the historically low mortgage rates might have been more attractive to Asian buyers, which eventually led to a higher pace of home sales.
Figure 2: Home Sales Index: Asian American vs. Non-Asian American Homebuyers
Female Asian American Homebuyers Outpace Asian American Males
Figure 3 shows gender specific home buying trends among Asian American buyers between March 2019 and December 2021. Before the onset of the pandemic, homebuying among Asian American females grew faster than among Asian American males. The average Home Sales Index (HSI) for female Asian American buyers between March 2019 and Feb 2020 was 120.3 , 3.0% higher than their male peers.
The impact of the pandemic was felt relatively equally by male and female Asian American buyers, with male and female average HSI’s of 98 and 103, respectively, between March and July 2020, down significantly from pre-pandemic. However, post pandemic, Asian American female homebuying recovered more quickly than for Asian American males. In June 2021, Asian American homebuying peaked for both males and females. Asian American females saw a peak HSI of 197.3, nearly two times the rate of homebuying as compared to the baseline in March 2019, and almost two times the rate in June 2020. On average, between July 2020 and December 2021, Asian American females had an HSI 8% higher (157) than Asian American males (145.5). This means that the growth rate in home purchases by Asian American females grew more than that for males and that the gap widened in the housing market’s pandemic recovery.
Figure 3: Home Sales Index: Asian American Male vs. Asian American Female Homebuyers
Asian American Millennials Outpace Other Generations
The timing of the pandemic coincided with peak home-buying years for millennials, resulting in millennial first-time home buyers entering the market at higher rates than other generations. This trend was consistent within the Asian American population, as shown in Figure 4. Before the onset of the pandemic, all generations of Asian American homebuyers were trending quite closely. However, the generations start to split apart at the onset of the pandemic in March 2020, and from there forward, millennial Asian Americans are seeing greater growth in homebuying than other generations of Asian Americans.
Interestingly, within the Asian American population, the rate of homebuying in the observed time period is generally highest for the youngest generation studied (millennials), and lowest for the oldest generation studied (Silent), with Gen X and Boomers falling in line according to age in between. The pandemic hit older generations of Asian American buyers hardest in May 2020, with the Silent generation, Boomers and Gen X slowing buying to HSI’s of 74.0, 76.3 and 80.8, respectively. Millennial buying behavior was impacted slightly less severely, only reaching an index of 90.4.
In the months following the onset of the pandemic, all generations recovered, but millennials outpaced the older generations. Between August 2020 and December 2021, Asian American millennials sustained an average HSI of 159.1, compared to Gen X’s index of 148.9, Boomers’ index of 145.0, and Silent generation’s index of 145.5. In other words, millennials grew homebuying activity by 59% over their pre-pandemic pace while other generations saw activity grow by only 45% to 49%, on average.
Figure 4: Home Sales Index: Asian American Homebuyers by Generation
Asian American Millennials Outpace Non-Asian Millennials in Homebuying Post-Pandemic
As shown in Figure 5, Asian American and non-Asian American millennials tracked fairly closely in their rate of homebuying (as compared to the March 2019 baseline) pre-pandemic. However, as discussed previously, Asian American homebuyers saw a sharp decline in activity early in the pandemic, perhaps due to safety concerns, a force which was felt by all generations, including millennials. During the March – July 2020 timeframe, the HSI for Asian American millennials was 115, while the index for non-Asian American millennials was 8.7% higher (125). The dampening effect of the pandemic and related safety concerns was especially severe in May 2020, when the HSI for Asian American millennials dropped to 90.4 while the HSI for non-Asian American millennials was higher at 104.
After this early-pandemic stage, Asian American millennials started buying homes at a faster-growing rate than non-Asian American millennials, reaching a peak HSI of 196.5 in June 2021, as compared to the non-Asian American millennial peak of 175.5 in the same month. Between August 2020 and December 2021, Asian American homebuyers had an average HSI of 159, which translates to an average nearly 60% more buying activity compared to the March 2019 baseline. In the same timeframe, non-Asian American millennial buyers had an average HSI of 144.4, a growth rate of less than 45% over their March 2019 baseline, lagging the improvement in Asian American millennials’ rate of homebuying by 9.2%.
Figure 5: Home Sales Index: Asian vs Non-Asian American Millennials
Methodology
Sales information is obtained from the Realtor.com public records database. In the analysis, we examine arms-length transactions that occurred between March 2019 and December 2021. An arms-length transaction is one in which buyers and sellers each act in their self-interest to try to get the best deal they can. The most common non-arm’s length transactions are sales between family or friends. Find out more about arm’s length home sales here. We further narrow our samples to non-corporate transactions. A transaction is defined as a non-corporate deal when the primary buyer is an individual. We also exclude individual buyers who purchase properties via family trusts and limited liability companies. For the purpose of this study, we only include residential properties.
Buyer ethnicity is parsed using the primary buyer’s last name from the deed record and an estimation of their racial and ethnic origins from the 2010 Decennial Census Surname Files. The file contains 162,253 unique last names which occurred 100 or more times in the 2010 Census. For each last name, the Surname File includes the likelihood of a name being Asian American. Buyer gender is identified using the primary buyer’s first name from the deed record and gender likelihood from public information on data.world. Buyer generation is parsed using the primary buyer’s first name from the deed record and Social Security Administration data on names and birth years. The file includes first names between 1920 and 1997. For each first name, we count its frequency for each year. We also assign a generation for each year (millennial: between 1981 and 1997; Gen-X: between 1965 and 1980; Boomer: 1946 and 1964; Silent: before 1946). We calculate the generation likelihoods from these counts. For all buyer types, likelihoods are used as weights to estimate the number of each type of homebuyer.
The Home Sales Index (HSI) is calculated by using March 2019 as a benchmark in the number of home sales. The index is the number of sales relative to March 2019, multiplied by 100 (i.e. March 2020 sales count/March 2019 sales count * 100). The index is used to normalize the data in order to compare the growth of home buying by different segments of the population in the studied timeframe.