Overbuilding and a foreclosure epidemic spurred by the housing and financial crises have saddled the United States with a staggering surplus of homes for sale, many of them distressed properties or vacant.
Vacancies are a key measure of the health of the housing market, says Jed Kolko, chief economist at real estate information website Trulia.Fewer vacancies can indicate a robust local economy with employment opportunities, while high vacancy rates can depress home prices and discourage new construction.
The disparity in vacancy rates across the country is huge. According to 2010 Census data, rates ranged from 3.9% in San Jose, Calif. to 13.9% in New Orleans, La. Areas plagued with high vacancy rates tend to be regions that have suffered some of the largest drops in home prices, Kolko says. They also tend to have high unemployment rates.
California is an odd case–although the epicentre of the housing bubble and subsequent meltdown, it enjoys some of the lowest vacancy rates and some of the priciest housing markets. Despite substantial price declines and foreclosure troubles, the supply and demand dynamic still works to the Golden State’s advantage. In short, there still aren’t enough homes to satisfy the demand to live there.
Looking ahead, where vacancy rates are lowest—the West Coast, Northeast and upper Midwest—housing markets will recover sooner and prices will start to creep up again, Kolko says. Conversely, areas with high vacancy rates will have to wait longer for the excess supply of homes for sale to dissipate and home prices to rebound.
Here’s a look at regions with the highest and lowest vacancy rates.
Vacancy rate: 7.9%
Unemployment rate: 9.1%
Note: Vacancy rates exclude seasonal, recreational, and occasional-use homes.
Sources: Trulia, Bureau of labour Statistics.
California dominates the list of metro areas with the lowest vacancy rates, primarily due to the persistent demand for housing in the state, even in the wake of the housing meltdown.
Here's a closer look at the top five metro areas with the lowest vacancy rates.
Vacancy rates tend to be high in areas hardest hit by the foreclosure crisis, spiking in the South, parts of the Midwest, and the Southwest.
Here's a closer look at the top five metro areas with the highest vacancy rates.