I can’t tell you how excited I am to be President of the Asian Real Estate Association of America (AREAA). We recently shared the findings of AREAA’s AAPI Opportunity Index at our AREAA Unplugged event that shows the growth and how “homebuyer ready” the AAPI (Asian American Pacific Islander) community is.
The report also highlights a concern. Why does the financially secure AAPI community have a homeownership rate of only 61% compared to 74% for non-Hispanic whites?
The AAPI community has continued to boom and become an integral part of the U.S. population. Not only is the AAPI demographic growing in numbers — now 21 million and expected to reach 46 million by 2055 — but it is also growing financially as well.
High income, good credit support readiness to buy
The report showcased AAPI homebuyer readiness by looking at a few different factors. AAPIs have a median income of over $94,000, 32.4% higher than the national mark of $71,000. Hispanics followed with a household income of $55,000 with Black Americans earning $45,000. AAPIs also have excellent credit with the CFPB reporting the community has an average FICO score of 764.
While AAPIs only represent 6.3% of the American population, we over index in wealth as showcased by the AAPI community contributing more than 8% of all U.S. income tax. The AAPI community has a buying power of over $1.3 trillion dollars, a figure that is larger than the GDPs of most countries. Perhaps even more notably, this figure has more than doubled since 2010, at a rate that is faster than every other demographic in the U.S.
Our economic impact is even greater in numerous states including California, New York, and Texas. In California, for example, AAPIs are responsible for over $439 billion dollars of the state’s economy, while over 910,000 Californians are employed by AAPI-owned businesses.
Increased participation in government supports change
The AAPI Opportunity Index found that Asian Americans are also becoming much more prominent in local and national government. In 2020, a record 158 AAPIs ran for state legislatures and there was also a 47% increase in AAPI voter turnout.
Additionally, over 13 million Asian Americans were projected to be eligible to vote in the recent midterm elections, according to Pew Research, as non-Hispanic Asian Americans are the fastest growing racial or ethnic group in the U.S. electorate.
These are positive developments, but we can do more. Politco reported last year that despite our increased population size, the AAPI community makes up only 0.9% of all elected leaders across all levels of U.S. government. Growing our “seat at the table” can influence policy that would positively impact the AAPI and other underserved communities. The more involved we become in politics, the more our needs will be met.
AAPI buying power is immense
Here is a look at the state’s where members of the AAPI community have the most buying power:
- California – $439 billion
- New York – $109 billion
- Texas – $100 billion
- New Jersey – $70 billion
- Washington – $58 billion
- Illinois – $49 billion
- Virginia – $39 billion
- Florida – $37 billion
- Hawaii – $36 billion
- Massachusetts – $36 billion
And nationwide there are more than 3.6 million people employed in AAPI-owned businesses.
But here is the rub. If AAPIs have wealth and great credit history, why is our homeownership level so low? And why are we behind in loan applications as the report shows that AAPIs only recently had 1.6 million closed loan applications while white, Black, and Hispanic Americans have 13.2 million, 1.6 million and 1.7 million respectively?
While the answers to those questions are complex, I want to address three primary concerns – language barriers, access to credit and discrimination.
Language remains a major obstacle in the homebuying process as English is a second language for many Asian Americans. Children, or other family members, are often forced to serve as translators throughout the process which not only complicated things, but also leaves room for misinterpretation.
Fortunately, thanks to AREAA’s efforts with the FHFA we have made great strides in creating translated documents so that Asian Americans feel more in control when navigating the real estate market. While Fannie Mae has its Supplemental Consumer Information Form (Form 1003) translated into Spanish, Chinese, Korean, Tagalog, and Vietnamese, we still have many more prominent languages that need translations.
And while AAPI people have great credit scores, we still have a sizeable part of our community which has an aversion to debt. Also remember that immigrants — even if they have been here for several years with good jobs — may not have built up great credit. That is why it was such a huge win when the FHFA recently shared that alternative credit — rent, utility and other routine payments — would also be considered when buyers apply for a loan.
Finally, the recent rise of hate crimes is impacting the AAPI community. Our earlier State of Asia report found that AAPI people are migrating outside of our traditional strongholds, specifically to the South and Southwest. But if we have a fear of not being welcomed that will obviously slow our homebuying efforts.
How to help
The real estate industry can join AREAA in paving the way for greater AAPI homeownership in several ways. First, brokerages need to recruit and provide training for AAPI agents while mortgage and title firms do the same. Representation is critical. This is especially true in communities with large AAPI populations. We need agents who not only relate to our community but are also fully aware of the different AAPI cultures. Remember our community is made of up about 50 different nationalities.
These agents will be best suited to educate potential AAPI homeowners and put them on the right track to truly fulfilling the American Dream. Also, the more AAPIs see others like them in the profession, the easier it is to enter the process.
We also all have a responsibility to avoid discrimination and work to remove instances of unconscious bias. Make certain you follow the lead of the National Association of REALTORS Diversity, Equity and Inclusion efforts and ensure that your company welcomes diversity and learns from your diverse staff and agents.
Also, it is critically important for brokerages to be visible in local prominent AAPI communities. For example, engage in Asian American Pacific Islander Heritage Month activities coming in May, advertise in various AAPI publications or sponsor local events.
As I begin my year-long presidency of AREAA, I am excited about the opportunity ahead of us as we continue to showcase the benefits of homeownership to the AAPI community as we work to eliminate the barriers of entry.
Kurt Nishimura is owner of KN Realty Group, a real estate consulting company offering asset management, due diligence, feasibility and industry studies and acquisition services based in Phoenix, AZ.
This column does not necessarily reflect the opinion of RealTrends’ editorial department and its owners.
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