The 10 Markets with the Most Empty Homes
But a less-watched indicator called vacancy rates speaks volumes about a housing market’s long-term condition. A home that sits idle does not merely diminish the value of other homes on the market, it also discourages investment in an entire neighborhood. High home vacancy rates can be toxic to real estate prices.
Based on vacancy data provided by Trulia, a leading aggregator of real estate listings, 24/7 Wall St. reviewed the housing markets with the lowest and the highest vacancy rates.
Strong housing markets can maintain a low vacancy rate even during busts, explains Jed Kolko, chief economist at Trulia. Overall, the nation’s supply of unoccupied homes — defined as homes where no one receives mail — decreased by 5% this year compared to last, according to Trulia. The San Francisco-based company reports that this year’s national vacancy rate is 3.4%.
A lack of space to build new homes contributes to scarcity in densely populated areas, which in turn helps to bolster home prices. San Jose, Calif., Bethesda, Md., and Middlesex County in New Jersey are examples of housing markets that maintain low vacancy rates “mostly because they can’t build new houses,” Kolko says. “They’re expensive and difficult to build in.”
At the other extreme, areas with the highest level of housing vacancies — i.e., oversupply — grapple with serious maladies such as high unemployment, population decreases, high numbers of foreclosures and, perhaps worst of all, overbuilding, Kolko adds.
Detroit is arguably America’s most famous example of oversupply due to abandoned properties. Detroit may have 33,000 vacant homes, give or take a few thousand that have already been demolished. Michigan Gov. Rick Snyder forwarded a plan to demolish abandoned homes in Detroit. The plan would augment similar initiatives by Mayor Dave Bing, which have already led to the demolition of 4,200 homes in the past three years, according to the Detroit Free Press.
Among areas with high vacancy rates are metropolitan areas such as Tucson, Ariz., South Florida and Las Vegas, Nev. that experienced significant overbuilding during the housing bubble, up until it burst in 2008. It takes years to work through an abundant supply of homes, particularly when high unemployment keeps some potential homeowners out of the market.
Not surprisingly, these areas with an oversupply of homes also tended to experience steep drops in home prices in the past four years. Home values in West Palm Beach, Fla., for example, plunged a whopping 48.4% during this period. But even that steep decline feels like a speed bump compared to the 60.4% cliff that has engulfed Las Vegas.
Las Vegas, of course, found a place on a list supplied by Trulia of American housing markets with the 10 highest vacancy rates as of October, 2012. The vacancy rate data are based on unoccupied residences data from the United States Postal Service. Trulia also provided median asking price per square foot, change in asking price for the past 12 months and the peak-to-trough price change. 24/7 Wall St. also identified unemployment rates for September, 2012 for these metropolitan areas.
These are 10 U.S. housing markets with the highest vacancy rates