U.S. home prices have recovered substantially since the housing crisis. The improvement, however, has been uneven, and in many U.S. cities housing markets continue to struggle. In others, property values and foreclosure rates have actually worsened. In such cases, many homeowners find they have no choice but to abandon their property. An estimated 1.8% of all residential properties in the United States have been flagged as vacant by mail carriers, according to recent data released by real estate data tracking firm RealtyTrac.
To identify the 15 cities with the highest vacancy rates, 24/7 Wall St. reviewed data from mail carriers obtained by RealtyTrac on some 26,000 zip codes. By combining the zip code data, we were able to review housing characteristics for over 5,000 U.S. cities. Indian Rocks Beach, Florida leads the nation with 25.9% of housing units flagged as vacant. East Saint Louis, Illinois rounds out the 15 with a vacancy rate of 10.8%.
According to Daren Blomquist, vice president at RealtyTrac, a high vacancy rate usually means the housing inventory is far greater than the demand for homes — the telltale sign of an unhealthy housing market. With the exception of Indian Rock Beach, Florida, and Brigantine, New Jersey, home values are very low in these cities. In 10 of the 15 cities, the median home value is less than $100,000, in contrast with the national median home value of $176,700.
Home values have also fallen in these areas. With the notable exceptions of Gary, Indiana and Greenville, Mississippi, 11 of the remaining cities reported double-digit median home value declines from 2009. In six of the 15 cities, the decline since 2009 was greater than 35%.
The likelihood that a home will be abandoned goes up considerably when that home is in foreclosure. Nationwide, one in every 1,147 residential properties is in foreclosure. In nine of the 15 cities, one in fewer than 1,000 properties is in some phase of the foreclosure process. In six, one in fewer than 500 properties is in foreclosure.
The health of these housing markets is ultimately tied to the area’s economic health, which is also often mirrored by demographic changes. “These tend to be cities where people are losing jobs and also cities that have been losing population,” Blomquist said.
Eight of the 15 cities with the highest vacancy rates have also experienced double-digit population declines since 2009. In four, the population shrank by more than 20% over that period.
It is perhaps no surprise that a majority of U.S. cities with the highest vacancy rates are located in the country’s Rust Belt. Many of what were once thriving cities that emerged at the dawn of the Industrial Revolution are now effectively ghost towns. The largest and most famous of these cities is Detroit, Michigan.
Home to about 1.8 million people at the height of its economic strength in the 1950s, only about 700,000 call the city home today. A multitude of factors contributed to the city’s decline. In the late 1960s, for example, many of the city’s white residents moved to the suburbs, contributing to the city’s population decline. Making matters worse, the Motor City was highly dependent on automobile manufacturing. The Detroit auto industry then began to suffer from foreign competition and manufacturing plants opening throughout the rest of the country. Ultimately, the Great Recession starting in 2007 further hurt the industry, and with a tax base that had already been eroding for decades, the city was financially doomed. When Detroit filed for bankruptcy in 2013, it was was the largest municipal bankruptcy in U.S. history.
To identify the 15 cities with the highest vacancy rates, 24/7 Wall St. reviewed the percentage of residential properties flagged as vacant by postal carriers in 26,505 zip codes provided by RealtyTrac. The data were obtained by RealtyTrac at the end of the third quarter of this year. We aggregated these zip code data to the city level by combining housing characteristics for zip codes located in 5,578 U.S. cities. Cities with fewer than 3,000 residential properties were excluded from our analysis. It is unusual for postal carriers to flag vacation homes as vacant. However, the towns where vacated homes were likely second homes and not truly abandoned were also not considered. Foreclosure rates, the percentage of vacant properties with open loans, in foreclosure, and bank owned were also provided by RealtyTrac. Social and economic data, including population estimates, poverty rates, median household income, and median home values are five-year averages through 2013 from the U.S. Census Bureau’s American Community Survey (ACS). Population and home value changes were calculated from the five-year averages through 2009. These are the latest and most accurate data for the cities reviewed.
These are 15 American ghost towns.