Risks and Rewards in Wealth Building: Asian American Homeownership and Foreclosure Pre and Post Housing Boom in East San Gabriel Valley, California

Abstract

While much research exists on African Americans and Latinos after the housing crisis in 2007, much less is known about the Asian American experience particularly as it relates to foreclosure and housing burden. This study takes a quantitative case study approach examining Asian Americans in one region of Los Angeles County. Utilizing data from the Census, Home Mortgage Foreclosure Data, and Data-Quick, we provide a more comprehensive picture of the Asian American housing experience before, during and after the housing boom in 2005. Findings show that Asian Americans' decline in homeownership could not be explained by foreclosure. In fact, Asian Americans may have avoided foreclosure in this region using higher down payments, avoiding subprime loans, and loans with variable interest. A potential cost of these actions is higher housing burden, which is closely related to default and foreclosure. Thus, policymakers and community leaders should continue to monitor Asian American homeownership as the impact of the housing collapse may be delayed for Asian Americans compared to other racial groups.

Impacts of Multiscale Racial Concentration on Neighborhood Foreclosure Risk in Immigrant Gateway Metropolitan Areas

“…Patraporn et al. () examined affluent and racially diverse neighborhoods of East San Gabriel Valley, California, and found that Asian Americans had lower default and foreclosure rates than other groups in part because Asian homeowners were less likely to have subprime and/or variable interest loans. Additionally, homeowners in Los Angeles's middle‐class Asian and Latino neighborhoods had similar or lower foreclosure rates than homeowners in White areas (Lee ).…”

“…For example, foreclosed properties in Southern California Latino neighborhoods with more Black residents and lower-income residents took longer to sell than properties in Latino neighborhoods with fewer Blacks and higherincome residents (Pfeiffer and Molina 2013). Patraporn et al (2015) examined affluent and racially diverse neighborhoods of East San Gabriel Valley, California, and found that Asian Americans had lower default and foreclosure rates than other groups in part because Asian homeowners were less likely to have subprime and/or variable interest loans. Additionally, homeowners in Los Angeles's middle-class Asian and Latino neighborhoods had similar or lower foreclosure rates than homeowners in White areas (Lee 2018).…”

“…Several studies in Los Angeles offer potential reasons for why Asian neighborhoods were associated with lower foreclosure risk scores. In a case study of the East San Gabriel region in Los Angeles County, Patraporn et al (2015) found that Asian American homeowners had lower rates of foreclosure relative to other racial groups. They offer several explanations, including Asian American homebuyers paying a higher down payment and borrowing more prime and fixed interest rate loans.…”

“…For example, Los Angeles Chinese American banks would issue mortgages to immigrants without credit history because the homeowner could pay a third of the mortgage upfront as the down payment (Li et al 2002). There may also be differences among Asian groups due to socioeconomic disparities by country of origin and whether groups migrated voluntarily or were refugees (Ong et al 2013;Patraporn et al 2015).…”