Tag Archives: vacancy

Tight American rental market

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Even though the housing market may be showing some good signs, the rental market is still tight:

Reis’ fourth-quarter data showed that apartment vacancies around the country continue to tighten. They’re at 4.1 percent. For renters, it’s only getting tougher and tougher…

New Haven, Conn., moved into the No. 1 spot with the lowest vacancy rate, 2.2 percent. It was followed by San Diego, San Jose, New York City and Buffalo, all of which had vacancy rates of 2.7 percent or tighter.

Elsewhere around the country, the middle of the pack still had tight markets: Chicago (ranked 30th) and Baltimore (33rd) were among those that had 3.7 percent vacancies; Los Angeles (18th) had 3.1 percent; Dallas and Orlando (58th and 60th, respectively) had 4.9 percent vacancies.

Shouldn’t this lead to the construction of more units?

Though we’re at a 4 percent vacancy rate — incredibly low, by historical standards — construction is just at its historical average.

But we’re just now seeing an increasing ramp-up of construction activity. In the third quarter, we saw about 42,000 units completed, the most that we’ve seen on a quarterly basis since 2003.

Rental demand may be high – and some are predicting long terms upticks in renting due to this economic crisis which will scare people away from owning – but it sounds like the economy is still not strong enough to support a lot of new construction. What will it take to start providing significantly more rental units?

More difficulty with housing vacancy data

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I’ve written about this before but here is some more evidence that one should be careful in looking at housing vacancy data:

In early 2009 the Richmond, Virginia press wrote numerous articles after quarterly HVS data on metro area rental vacancy rates “showed” that the rental vacancy rate in the Richmond, Virginia metro area in the fourth quarter of 2008 was 23.7%, the highest in the country. This shocked local real estate folks, including folks who tracked rental vacancy rates in apartment buildings in the area. The Central Virginia Apartment Association, e.g., found that the rental vacancy rate based on a survey of 52 multi-family properties in the Richmond, VA metro area was around 8% — above a more “normal” 5%, but no where close to 23.7%. And while the HVS attempts to measure the overall rental vacancy rate (and not just MF apartments for rent), the data seemed “whacky.”

When I talked to Census folks back then, they said that there quarterly metro area vacancy rates were extremely volatile and had extremely high standard errors, and that folks should focus on annual data.

However, “annual average” data from the HVS showed MASSIVELY different rental vacancy rates in Richmond, Virginia than did the American Community Survey, which also produces estimates of the vacancy rate in the overall rental market…

There are several other MSAs where the HVS rental vacancy rates just look plain “silly.” Some Census analysts agree that the HVS MSA data aren’t reliable, and even that several state data aren’t reliable, but, well, er, the national data are probably “ok” – which they are not.

If you want to read more on the issue, there are a number of links at the bottom of the story.

If the estimates are so far off from other estimates generally regarded as being reliable like the American Community Survey or the decennial Census, it would look like a new system is needed to calculate the quarterly vacancy rates.

I wonder how much these figures could hurt a particular community. Take the case of Richmond: if data suggests the vacancy rate is the highest in the country even though it is not, is this simply bad publicity or would it actually affect decisions made by residents, businesses, and local governments?

High vacancy rates at strip malls and shopping centers

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More sour news regarding the economy, this time regarding retail space in strip malls and shopping malls:

Mall vacancies hit their highest level in at least 11 years in the first quarter, new figures from real-estate research company Reis Inc. showed. In the top 80 U.S. markets, the average vacancy rate was 9.1%, up from 8.7%.

The outlook is especially bad for strip malls and other neighborhood shopping centers. Their vacancy rate is expected to top 11.1% later this year, up from 10.9%, Reis predicts. That would be the highest level since 1990.

In 2005, the mall-vacancy rate hit a low of 5.1%. For strip centers the boom-time low vacancy rate was 6.7% that same year.

The article goes on to mention how this problem is particularly acute on the suburban fringe where development was taking place or was predicted to take place.

While strip malls take a beating from those opposed to sprawl and suburban garishness (think James Howard Kunstler – see his TED speech on the topic here), they can be quite important to local economies. From where I live in the suburbs (roughly 25-30 miles west of Chicago), there are numerous strip malls, including a number that I can walk to within fifteen minutes. While most of these businesses are not flashy, they encompass certain consumer needs from car care places to drug stores to restaurants to hardware stores. I have always wondered how businesses thrive in these settings: there is so much competition (why can’t the customer just go to the competition in the strip mall down the street?) and many decry the strip mall (though it would be an interesting debate to see whether people think they are worse than big box stores).

Florida leads country with 18% home vacancy rate

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While foreclosures and vacancies are a problem throughout much of the United States, some states have been hit harder than others. New data from the Census Bureau shows Florida has the highest home vacancy rate in the country:

On Thursday, the Census Bureau revealed that 18% — or 1.6 million — of the Sunshine State’s homes are sitting vacant. That’s a rise of more than 63% over the past 10 years…

The vacancy problem is more dire in Florida than in any other bubble market: In California, only 8% of units were vacant, while Nevada, the state with the nation’s highest foreclosure rate, had about 14% sitting empty. Arizona had a vacancy rate of about 16%.

In Florida, the worst-hit county is Collier — home of Naples — with a whopping 32% of homes empty. In Sarasota County, 23% of the housing stock sits vacant, while Lee County (Cape Coral) has a 30% vacancy rate. And Miami-Dade County has a vacancy rate of about 12%.

The article goes on to say that the problem of vacancies has grown partly due to a slow-down in population growth in the state in the late 2000s. Additionally, the large number of vacancies has helped lower housing values: “The median price for homes sold in January was just $122,000, according to the Florida Association of Realtors. That was down 7% from 12 months earlier and less than half the price at the peak of the market.”

It would be interesting to see new or recent studies that look at how these vacancies impact community and neighborhood life. Beyond the economic impact, how does having a large percentage of empty houses effect interactions that people have with each other?

Also, how exactly are vacancy and foreclosure statistics related? Nevada has the highest level of foreclosures but a lower rate of vacancies – is this because more people have actually gone through the foreclosure process?

(If you want some insights into how the Census Bureau calculates different vacancy rates, see here. This would have been helpful information for an earlier discussion about seemingly different vacancy statistics.)

Exactly how many American homes are vacant?

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Two bloggers have a disagreement about how many vacant homes there are in the United States. Check out the debate and the comments below.

The moral of the story: one still needs to interpret statistics and what exactly they are measuring. The different between 11% and 2% is quite a lot: the first figure suggests 1 out of 10 housing units are vacant while the second figure suggests it is 1 out of 50. If you look at Table 1 of this Census Bureau release regarding housing figures from Quarter 4, it looks like the vacancy rate is 2.7%. But there may be confusion based on Table 3 which suggests the vacancy for all housing units is roughly 11% for year-round units. And later in the release, page 11 of the document, gives the formula for the vacancy calculation and an explanation: “The homeowner vacancy rate is the proportion of the homeowner inventory that is vacant for sale.”

There are some other figures of note in this document. Table 4 shows that the homeownership rate is at 66.5%, down from a peak of 69.2% in the fourth quarter of 2004. (It is interesting to note that this rate peaked a couple of years before the housing market is popularly thought to have gone downhill. What happened between Q4 2004 and the start of the larger economic crisis? Table 7 has homeownership rates by race: the white rate has dropped 1.1% since 1Q 2007 while Blacks and Latinos have seen bigger drops (3.2% and 3.3%).