What Are The South Asian Home-buyers In The US Looking For?

October 19, 2021

Buying a home is a quintessential rite of passage to adulthood. The pride of owning a home, and the security it provides, is what drives many of us.

In the United States, the number of South Asian-American home buyers is on an upward trajectory:

  • Between 2000 & 2019 Asian-headed households grew by 83%
  • 60% of South Asians in the US were homeowners, and 
  • Asian Indians, the largest subgroup is currently at 56% homeownership and are outpacing the other ethnic groups

South Asians living in the US are a lucrative target segment for brands that serve the housing industry – banks, mortgage lenders, refinancers, real estate companies, and realtors. However, a deeper understanding of the demographic is necessary to target these affluent South Asians. 

In this article, we discuss:

  • The changing outlook of South Asians in the US towards buying a home
  • What are the potential home buyers looking for?
  • How can brands tap into this potential target segment?

A Shift In Outlook

The pandemic, and the restrictions it brought highlighted the need for owning a home. Working professionals who were used to spending close to 12 hours outside were suddenly confined to their apartments or their parent’s home. With remote learning and work from home likely to stay, the entire living space needed to be reimagined. 

Homes were now viewed not only as places of relaxation, but places from where one could work, exercise, relax, and spend quality time with family and friends. And as the days of restrictions dragged on, the need for a home that provided all these amenities was cemented, especially affluent audiences who work in high-paying jobs.

Criteria That Tilt The Balance

A Home for the whole family

Many South Asian households live in multigenerational setups. And with the number of members spending time at home likely to increase, owing to hybrid working models and changes in lifestyle, the homes they buy need to have something for everyone. 

For example, for an Indian (one of the largest segments of home-owners), a home needs to have a good prayer space for family events like poojas (daily rites or elaborate rituals performed by Hindus, Buddhists, Jains, and in other popular religions of South Asia) and ceremonial functions while also having quiet spaces for a home office. Kitchens that allow family members to gather, cook, and eat together are things that are very important. 

Traditional beliefs such as Vaastu: a Hindu and Buddhist principle of design and layout of the home, which is important to the older generation of South Asians can also play a factor in the choice of a home. And with South Asian homeowners increasing in numbers, the demand for these criteria is increasing. 

Scholastic Appeal 

Education has been the strongest driver of social mobility among South Asian families. 

South Asians prefer buying real estate in good school districts, that provide a sense of community and fulfill their aspirational and academic dreams. In fact, they would rather sacrifice other things, to prioritize quality education for their wards.

Factors like distance from top graduate schools and centers of co-curricular activities (eg: music tutorial centers, and gymnasiums) play a crucial role in determining their home buying decision. 

Around 35% of the Asian households live in the New York, San Francisco, San Jose, or Los Angeles metros, according to a study by Zillow, an online real estate marketplace.

For South Asians, the strongest determinant for the “location, location, location” mantra is concentrated on areas that have good schools. The most educated cities in America that have a high population of South Asians also appear in top school districts

For example, New York has the highest population of South Asians than any other urban area in the US and around 711,000 Indians live in it. In addition to New York being a melting pot of culture and innovation, it is home to top schools and top institutes like New York University, Columbia University, Cornell, and Syracuse University.

Money Matters

South Asians are also likely to make an upfront payment, rather than take out hefty loans for the purchase. Saving up money in banks, or in physical saving pots is a tradition that dates back to multiple generations. The concept of ‘family banks’ or banks where the entire family has accounts is a common practice. 

In 2020, out of 18.8 million loan applications with race and ethnicity information, 8 percent (1.6 million) were submitted by Asian Americans and Pacific Islanders (AAPIs) consumers. Of the total 1.6 million, Asian Indian was the largest Asian subgroup at 25.3 percent. 

The average age of Asian Indians applying for a loan at present is 42 years. Despite their younger age, Asian Indian borrowers also had the highest average incomes at over $160,000. 

Using the 2020 Home Mortgage Disclosure Act (HMDA) data, Consumer Financial Protection Bureau (the Bureau) found that Asian Indian borrowers paid lower interest rates on average. South Asians have a low default risk – they have higher average credit scores and incomes, and lower combined-loan-to-value (CLTV) ratios. 

Therefore, highly competitive interest rates, lower fees, and the ease of getting loans for a particular home will carry a big weight in their decision-making. The extent of risk and the processes involved in closing the mortgage on a home can also determine the type of house picked.

South Asians tend to be conservative in their banking habits and deal with only trusted institutions. Consumer Financial Protection Bureau found that South Asian borrowers were much less likely to take out loans for a home purchase than any other racial group in 2020 but were more likely to take out refinance loans.

Communicating To The Audience

Purchasing a home is an emotional affair. With the plethora of online tools available today, it is a given that every home buyer will do extensive research on the service provider vis-a-vis competition through Google Reviews, TrustPilot, Better Business Bureau, etc.

As the appetite for risk and real estate increases, South Asian buyers are now showing interest in newer cities, and different types of real estate such as ranches, bungalows, and Victorian homes, which were previously already popular among the general US population.

Brands and marketing teams looking to tailor messaging for the South Asian segment need an in-depth understanding of their social and cultural binding that influences the buying patterns. 

Rather than just where to reach them, it is more important to understand how to reach them. Every phase of the segment marketing journey needs to be thought through.

FrontAd’s curated database of tech-savvy, educated, and high net worth South Asian American consumers make it easy to connect with potential buyers and create lasting digital experiences.