- Asian mortgage applicants have low denial rates overall, but
those who are denied are disproportionately denied because of a
high debt-to-income ratio (DTI).
- Largely concentrated in more expensive areas, Asian mortgage
borrowers in 2022 purchased homes that were 42% more expensive than
the U.S. median mortgage buyer overall.
- Pacific Islander-headed households have the lowest
homeownership rate among all races across the lowest and highest
income levels.
SEATTLE, May 26, 2023
/PRNewswire/ -- A new Zillow® study finds Asian and Pacific
Islander (API) families, despite relatively high income levels,
bear the highest housing payment burdens among all races,
highlighting the unique financial strains many within the
communities encounter.
Many Asian and Pacific Islander (API) homeowners are heavily
concentrated in expensive markets nationwide, so the homes they
purchase are typically priced higher than homes overall. In 2022,
the typical value of a home purchased by Asian mortgage buyers was
$575,000, while Pacific Islander
mortgage buyers purchased homes valued at a median of $465,000, surpassing the overall median of
$405,000 for all U.S. mortgage
buyers. Primarily for this reason, API homeowners stretch their
budgets to achieve homeownership more than other races.
"Many API-led households live in pricier coastal metros like
New York, San Francisco, San
Jose, and Los Angeles,
which possibly helps drive up demand and thus the price home buyers
can expect to pay," said Nicole
Bachaud, senior economist at Zillow. "Residents of these
communities tend to prioritize living in these areas because they
offer a strong sense of community, access to cultural amenities and
proximity to ethnic enclaves where they can find familiar cultural
and social networks that often help facilitate area jobs."
Over the past decade (from 2011 to 2021), Asian homeownership
surged by 5.1 percentage points, reaching a record high of 63.1%,
outpacing all other racial and ethnic groups. Pacific Islanders
followed closely with a 4.6 percentage points increase. However,
despite these gains, both communities allocate a substantial
portion of their household income to mortgage and rent payments.
Nationally, when comparing across similar income levels,
Asian-headed households allocate a higher percentage of their
income towards housing payments than all other races except for
Pacific Islanders.
Although Asian mortgage applicants have the lowest mortgage
denial rate among all races, they are disproportionately burdened
by a high debt-to-income (DTI) ratio. According to preliminary 2022
Home Mortgage Disclosure Act (HMDA) data, 41% of Asian applicants
and 39.2% of Pacific Islander applicants who were denied a mortgage
had their denial attributed to a too high DTI ratio, surpassing the
33.6% of denials for all races being based on DTI. They also face a
higher proportion of denials due to insufficient funds to cover
closing costs and lack of collateral compared to other racial
groups.
While some signs point to housing gains, it's important to note
that the API community is a diverse landscape of several different
nationalities. Significant disparities in homeownership, household
income, and mortgage denials exist among different Asian and
Pacific Islander populations, with these gaps widening over time.
Each subgroup presents unique challenges that need to be
addressed.
"High incomes and homeownership gains may overshadow the
significant housing affordability challenges still faced by many
API households," said Bachaud. "Expanding housing inventory and
implementing policies and solutions to enhance affordability are
crucial for promoting homeownership and advancing housing equity in
the United States."
Share of Income
Spent on Housing Payments Across the U.S
|
|
|
Asian
|
Black
|
Hispanic
|
Pacific
Islander
|
White
|
Income Spent on
Housing Payments
(Based on middle
household income)
|
23.5 %
|
21.3 %
|
22.5 %
|
25.1 %
|
19.7 %
|
Income Spent on
Housing Payments (Based
on low household income)
|
85.1 %
|
69.4 %
|
70.2 %
|
94.0 %
|
58.8 %
|
U.S. Homeownership Rates
|
|
Year
|
Asian
|
Black
|
Hispanic
|
Pacific
Islander
|
White
|
2011
|
58.0 %
|
43.8 %
|
46.5 %
|
41.0 %
|
72.1 %
|
2021
|
63.1%
(+5.1%)
|
44.3%
(+0.5%)
|
50.6%
(+4.1%)
|
45.6%
(+4.6%)
|
73.4%
(+1.3%)
|
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SOURCE Zillow