Thanks to foreclosed homes sitting on the market and depressed sales prices and property values, it is getting harder to move homes for sale in many areas of the country. While many real estate investors are finding ways to work around this, traditional homeowners are, in many cases, giving up and moving on. As a result, last week the national vacancy rate for residential properties hit 13 percent last week – up nearly 1 percent from 2007. These numbers were reported by the U.S. Census Bureau. This means “more downward pressure on home prices,” says chief economist for Metrostudy, Brad Hunter, pessimistically, predicting that things are going to continue to get worse before they improve[1].
The vacancies are not evenly distributed, either. Maine leads the nation with 22.8 percent vacancy, but Vermont, Florida, Arizona and Alaska also have vacancy rates of 15 percent or higher. However, in many of these states second homes or vacation homes may be contributing to the appearance of high vacancy rates, and when these vacation homes are removed from the equation Florida, Arizona and Nevada top the list with vacancy rates around 10 percent.
This information was released last week by the U.S. Census Bureau last week. Many analysts complain that these types of surveys by the Census Bureau are misleading and alarmist since the studies do not distinguish between types of vacancies. “Someone is home, at least part of the year” in many of the homes that are counted vacant, points out Dan DeWitt, a columnist for the St. Petersburg Times who wrote a scathing reprimand last Friday in response to these numbers, pointing out that the Census just asks participants to identify the property where they spend the most time and does not actually factor in vacation homes that are paid for and not delinquent or truly abandoned[2].
DeWitt roundly criticized reporting that “generously added to the percentage of empty houses and, well, didn’t do all they could to put the figure in perspective.” Do you think that this type of study is in any way useful to investors? Can any reporting on the housing market even be trusted?
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[1] http://money.cnn.com/2011/03/28/real_estate/us_housing_vacancy_rates/
[2] http://www.tampabay.com/news/business/economicdevelopment/vacation-homes-skew-vacancy-rates-in-hernando-florida/1159467
“…these types of surveys by the Census Bureau are misleading and alarmist since the studies do not distinguish between types of vacancies. “Someone is home, at least part of the year” -this is inaccurate because the Census Bureau does ask participants if the house is occupied “part of the year”.
It’s not inaccurate, because if the census worker showed up at a time of year when the property was vacant, no data was collected. — Bryan Ellis
“…pointing out that the Census just asks participants to identify the property where they spend the most time and does not actually factor in vacation homes that are paid for and not delinquent or truly abandoned” Also inaccurate. The Bureau DOES ask if “it’s a vacation home”.
Again, incorrect. See above. — Bryan Ellis
This type of surveys only has value when you compare it to past years. Also, it only maters when I look at past years in my area. It would also be helpful to include other information that relates to this issue, such as unemployment levels, average family income levels, job growth rate ect.
what correlations can be drawn from vacancy rates?
Far more important, ALL that the census was looking at/asking about was whether someone lived there. Not if they were seriously delinquent in their mortgage/rent, and were about to be evicted in foreclosure. Not even if they had been living in the home for months, without paying rent/payments.
Given the huge numbers of underwater home owners, a survey conducted last year probably tells U.S. nothing about who current is, and is not, living there; or when or if the resident is about to exit stage left.