A Different Path to Homeownership: The Case of Taiwanese Immigrants in Los Angeles

Abstract

Taiwanese immigrants in Los Angeles stand in contrast to the well-documented homeownership deficit among immigrants. Despite the tremendous growth in Taiwanese immigrants during the 1980s, the Taiwanese homeownership rate was not only among the highest of all ethnic groups in 1990, but also recorded a phenomenal increase of 16 percentage points between 1980 and 1990. This paper examines this trend and assesses the contributing factors. It reveals that (1) education and wealth were contributors to Taiwanese high homeownership; (2) Chinese immigrants in general and Taiwanese immigrants in particular had endowment-adjusted homeownership rates well above that of non-Hispanic whites, while the ways in which ethnic Chinese immigrants achieve high homeownership were reflective of their distinctive paths of immigration; (3) surprisingly, higher English proficiency, an indicator of acculturation, was negatively associated with Taiwanese homeownership; (4) the large rise in Taiwanese homeownership in the 1980s was largely contributed to by young, highly educated, newly arrived Taiwanese with a low level of income and a high level of wealth. Findings refute the hypothesis that immigrants are always plagued by homeownership deficits. Well-off immigrants, such as the Taiwanese, may have followed a path of assimilation not yet documented in the literature; acculturation and social adaptation may no longer be preconditions for their economic integration. The arrival of well-off immigrants has a significant potential to bolster regional demand for owner-occupied housing.

Keywords:

• Taiwanese immigrants
• homeownership
• Los Angeles
• adaptation

Acknowledgements

The author is indebted to Raphael Bostic, Dowell Myers, Stephanie Nawyn, Sungho Ryu, Qiuyan Wang and three anonymous reviewers for insightful comments. Elizabeth Goode provided excellent assistance. Remaining errors are the author's own. An earlier draft was presented at the 2002 Population Association of America annual conference in Minneapolis. The research was prepared under Grant Number H-21390SG from the US Department of Housing and Urban Development, Office of University Partnerships. The author is also grateful for the travel support from USC Office of the Provost and USC Graduate and Professional Student Senate. Points of view or opinions in this paper are those of the author and do not necessarily represent the official position or policies of the grantors.

Notes

¹ Throughout this paper, whites refers to non-Hispanic whites, Asian to non-Hispanic Asian and blacks to non-Hispanic blacks.

² In this paper, ‘immigrant’ and ‘foreign-born’ are used interchangeably, although the foreign-born population may include temporary foreign visitors, such as international students and temporary workers, in addition to immigrants.

³ For several decades prior to 1965, foreigners were only allowed to emigrate to the US in numbers commensurate with their population size in the US. The Immigration and Nationality Act of 1965 is one of the most important shifts of immigration policy in the United States since 1921, giving priority to family reunification, people with needed skills and refugees. As a byproduct of the 1965 Act, Latin America and Asia have replaced Europe and become the main sources of immigration to the United States (Martin & Midgely, 2003).

⁴ Large immigration from Hong Kong and Macau was related to the proposed turnover to Chinese authority at the end of the 1990s (Skeldon, 1994). Meanwhile, mainland China began its open-door policy after the 1980s. For the first time since 1949 Chinese people were allowed to emigrate in large numbers. Many of the emigrants eventually came to the US.

⁵ The category of Chinese is officially designated by the Office of Management and Budget (OMB) for the purpose of budgeting and social programmes. There is no option for Taiwanese on the census form. Sporadically, people wrote ‘Taiwanese’ as their nationality choice in the 1990 census. Because the number who wrote ‘Taiwanese’ is very small, it is unclear whether their characteristics are representative of those who consider themselves as Taiwanese. Place of birth is therefore used to identify Taiwanese.

⁶ Tseng (1995) argues that, by relying on birthplace in the 1990 census, the number of Taiwanese immigrants could be underestimated. She suggests that country of last residence is a better way to define Taiwanese immigrants. Unfortunately, the US census does not provide such information. In addition, less than 15 per cent of all residents in Taiwan were part of the exodus from mainland China after the Second World War. The vast majority of those who were born in Taiwan are descendants of the ‘local people’ (benshengren) who came from mainland China a couple of centuries ago (Ng, 1998). In this sense, the characteristics of immigrants who were born in Taiwan should be representative of those of the Taiwanese. Furthermore, Taiwanese identity is socially constructed and deeply rooted in the socio-economic and political evolution of the island. It is not immediately clear whether the majority of those who were born in mainland China and later emigrated to the US would consider themselves as Taiwanese.

⁷ All housing prices and incomes are adjusted to 1989 dollars using the Consumer Price Index.

⁸ The proxy for wealth should be correlated with the amount of wealth in the home. Their relationship and impacts on homeownership attainment could be a topic for future research.

⁹ As suggested by one reviewer, an alternative measure to the duration of stay in the US would be the duration in the US housing market. For instance, a US-born household head aged 30 would have a 10-year experience in the housing market. In the case of immigrant householders, it depends on the age of the household head and duration since immigration. If an immigrant household head aged 25 came to the US for 10 years, her/his years in the housing market would be five years. The argument is that people begin to form independent households and join the housing market after age 20. The alternative setting would give an immigrant household a great advantage in the parameter estimates. Since immigrants usually have much shorter duration than US-born residents in the US housing market, the results would show that immigrants have much stronger propensity for homeownership than US-born households. While this setting may provide additional insight into immigrants' tenure decisions, it limits comparability with previous studies.

¹⁰ A number of authors have focused on the loan-to-value ratio as a measure of housing affordability (e.g. Bourassa, 2000; Haurin et al., 1997). However, it is not immediately clear whether new immigrants follow the procedure similar to that of US-born residents to obtain a mortgage. Given their short credit history and unsettledness, new immigrants may have a set of constraints different from those of US-born residents to purchase homes. The loan-to-value measure may not be applicable to immigrants as much as it applies to US-born residents. These issues are outside the scope of this paper.

¹¹ The coefficients of the interaction variables are the differences in the effects of these determinants on tenure choice for the concerned group versus whites. A statistically significant interaction variable indicates that the effect of this variable on tenure choice is significantly different for the concerned group than for whites.

¹² The category of speaking English well includes people who speak only English at home.

¹³ Endowment effects refer to the changes that can be captured by statistic models, while propensity effects cannot.

¹⁴ The sum of the quantities in equations (2b) and (2c) equals the total change given in equation (2a).

¹⁵ Detailed results are available from the author.