Austin Business Journal writes, "there are millions of homes sitting empty across America at a time when inventory and affordability are squeezing the nation's housing market.
According to a recent analysis of U.S. Census Bureau 2022 American Community Survey data by LendingTree Inc., there are nearly 5.5 million vacant housing units in the nation's 50 largest metro areas. That puts the housing vacancy rate across those metros at about 8%.
But the reasons why millions of homes are sitting vacant at a time when the nation's housing market is starved of inventory and home prices remain high — the median price of new houses sold in August was $430,300, down slightly from $436,600 a month prior — are varied and nuanced.
The study found, on average, 26.6% of the vacant housing units are empty because they’re for rent, while about 17% are vacant because they’re only used part time, such as a vacation home or second home. An average of 8% are empty because they’re being repaired or renovated.
So how much influence do these 5.5 million vacant homes have on the broader for-sale housing market?
Jacob Channel, senior economist at LendingTree (Nasdaq: TREE), said adding any supply to the housing market should theoretically help bring home prices down — but to potentially unlock the housing units sitting vacant right now (excluding the ones that are second or vacation homes) would require policy considerations specific to the cities where those units are located.
"I think it brings into question how we treat housing in the United States," Channel said. "We look at housing as an important, long-term investment but it’s obviously also shelter. That creates a lot of friction."
Some areas have weighed taxes aimed directly at second homeowners. For example, a pied-à-terre tax, levied on a luxury residential property that isn't used by its owner as a primary residence, has been proposed in places like New York City.
"We run into broader questions of what about vacation homes? Should they be taxed extra? Is that fair?" Channel said.
For rental units sitting vacant, questions persist about what could help incentivize renting those units out — potentially to a lower-income household that's been priced out of a market.
Among the markets analyzed by LendingTree, it found the greatest share of vacant homes to be in New Orleans (with a 16.1% vacancy rate), Miami (14.5%) and Tampa, Florida (13.8%). For popular vacation markets Miami and Tampa, LendingTree found 53.3% and 43.9% of units, respectively, were vacant because they were for seasonal, recreational or occasional use. In New Orleans, 18.6% of vacant units are for rent.
In some ways, New Orleans still hasn't fully recovered from the Category 5 Hurricane Katrina in 2005, Channel said, which is perhaps the basis for a more challenged economy that makes it harder to buy and rent homes.
In fact, the 2020 Census found New Orleans’ population down about 100,000 people from the 484,674 who lived there in April 2000, according to the Southern Poverty Law Center.
Most of the 50 markets analyzed by LendingTree don't have an elevated vacancy rate because a bunch of homes are sitting on the market for sale. The markets with the highest share of those types of homes were Richmond, Virginia (10.7%); Austin, Texas (9.3%); and San Antonio (9.3%).
Foreclosures also aren't a huge reason for vacant homes in any major housing market. Hartford, Connecticut, had the highest share of vacant homes because of a foreclosure, at 1.5%, followed by Cleveland at 1.4% and Boston at 1.3%.
Similarly, abandoned homes aren't a large percentage of the vacant housing stock in most major U.S. metros. Some of the cities in which such homes are a more robust share of the market are Memphis, Tennessee (where 8.6% of vacant homes are abandoned, possibly condemned or could be up for demolition); Birmingham, Alabama (8.4%); and Indianapolis (7.3%).
The issue of vacant homes in America is a complicated one, despite a seemingly simplistic cause-and-effect correlation: that unlocking vacant homes would add inventory to an undersupplied market and, perhaps, create conditions for price relief.
"It goes to show how variable the types of vacant housing [that] exist are," Channel said. "We have to look deeper at why they’re vacant, figure out how to lower the vacancy rate and build more housing.""
Source: Austin Business Journal
Written by: Ashley Fahey
Published: October 4, 2023
Posted by Grossman & Jones Group on
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