Asian Americans See Big Loss in Home Equity

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LOS ANGELES–Asian American-Pacific Islanders who own homes saw their greatest loss of equity following the national foreclosure crisis, despite their higher median income, according to a new study by the Asian Real Estate Association of America (AREAA) and the UCLA Asian American Studies Center.

While Asian Americans made some improvement in their rate of homeownership between 2005 and 2007, increasing from 59 percent to 60.3 percent, the study revealed that the national foreclosure crisis wiped out any modest improvements by 2008, returning the rate of homeownership by Asian Americans to 59 percent by 2009.

“The initial gains in homeownership for Asian Americans were lost during the current real estate downturn and it also exposed them to greater financial risk in terms of equity loss,” said Kenneth Li, Chairman of AREAA.

“There is limited research on how Asian Americans fared during the subsequent foreclosure crisis, but preliminary assessments and anecdotal evidence indicate that they lost considerable ground,” said Melany De la Cruz-Viesca, assistant director of the UCLA Asian American Studies Center.

“Especially troubling is the loss in equity many Asian American homeowners face.”
The median property value of Asian American homeowners decreased from the start of the foreclosure crisis in 2007 into 2009. The property value loss of Asian Americans between 2007 and 2009 was -$42,900 and that figure for Native Hawaiians and Pacific Islanders (NHPI) was -$47,000. These figures compare to the national equity loss during that period at -$9,100. Much of the large differential in equity loss can be explained by the fact that Asian Americans and NHPIs are highly concentrated in geographic areas where the housing downturn was more severe than in the rest of the nation.

“This finding again reinforces AREAA’s longstanding concerns that Asian Americans are disproportionately affected by the housing bubble because of population concentrations in markets such as Los Angeles, Chicago and New York, where housing costs are high,” Li said.
 

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