If you are relatively familiar with the real estate market, you have probably noticed a few things in the last 5 years. The competition is often fierce with multiple cash buyers. There are significantly more bilingual Asian American real estate agents. You are also seeing more and more Asian faces during open houses.
This is no longer news for the real estate industry. According to Zillow and 2015 U.S. Census, Asian Americans have the second highest home ownership of 57.7%, compared to Hispanics at 45.3%, and African Americans at 41.2%. This represents the highest growth rate of 48% since 1900, compared to 23% among Whites, 21% among African Americans, and 5% among Hispanics.
Not only are there more Asian Americans home buyers, they are also buying more expensive houses. According to 2016 U.S. Census, Asian Americans have the highest median home value in the U.S. at $367,599, which is 46% higher than White Americans. This is no surprise given Asian Americans’ higher household income, allowing them to afford homes worth $155,000 more than the typical American. It is important to note this data doesn’t even include the significant amount of Chinese oversea home buyers who are looking for investment opportunities. U.S. home sales to Chinese nationals totaled $27.3 billion in 2016, exceeding the total dollar sales figure of the next four countries in the rankings combined. We will save that interesting phenomenon for another Dose of Asianess.
When more American households are renting than owning since the last 50 years, Asian Americans make an unique exception. In many ways, home ownership is still a big part of the “American Dream” for Asian Americans. Besides their economical advantage, cultural factors play a critical role driving this behavior:
- Home ownership is a sign of success: Owning a home is closely tied to the “face” concept in Asian culture. Home ownership is directly associated with higher social status and even marriage eligibility. This concept roots deep since ancient times and continues to dominate in Asia today. For example, over 60% of women in China who live in major cities believe a house is necessary before tying the knot, according to a Sharpen Research Institute and Guangzhou Youth Weekly survey in 2015. Because those owning properties are usually deemed more successful, the aspiration of being a homeowner has become ubiquitous.
- Family matters: Because “Family First” is one of the most fundamental Asian values, the concept of home is much bigger than just a place to stay. Home buying is one of the highest priorities for Asian Americans, from new immigrants to young couples who are getting married to form their own family. Home ownership signifies security and stability for the family, and more importantly, a commitment to the relationship among family members.
- Family help with down payment: The “Family First” value also translates into financial support in Asian culture, especially when it comes to home purchase. Asian Americans are 25% more likely to receive gifts from family and friends when putting together a down payment than any other racial groups. It is common practice in the Asian American community for parents to gift a large sum of cash to their children when they are buying a home.
- Less likely to carry a large mortgage: Another reason for family support during home purchase is Asian Americans’ aversion to debt. Because mortgage is a relatively new concept in Asia, debt continues to carry a negative connotations in Asian culture. 48% of Asian Americans put more than 20% down payment when buying a home, compared to 33% of whites, 29% of Hispanics, and 25% of African Americans. Larger down payment means smaller monthly payment and higher purchase price as well.
Increasingly high home ownership among Asian Americans have significant impact in their general lifestyle and other in-home activities. In the next few Doses of Asianess, we will explore their higher propensity to smart home devices, in-home technology, home security systems, and much more. If you have any specific questions, drop me a line!