We’ve all heard that high US home prices are partly due to a severe housing shortage.
But a new study from LendingTree found that they actually do exist millions of vacant properties there – 5.6 million, to be exact.
LendingTree ranked the nation’s 50 largest metros by their percentage of unoccupied homes and found that, on average, 7.37% of homes in these metros are currently unoccupied.
So have we all been sold a bill of goods for this “housing shortage”?
Well, not exactly.
“Just because there are millions of vacant homes across the nation’s top 50, that doesn’t mean the U.S. has a housing glut,” says LendingTree senior economist Jacob Channel.
But Channel admits in its analysis that “with home prices as high as they are, it may seem strange that so many homes in the nation’s largest metros are vacant.”
The top three reasons why units are cheap
Millions of vacant properties in the U.S. don’t mean millions of abandoned and dilapidated homes line metro streets, Channel notes.
He says vacant homes can be — and usually are — unoccupied for many reasons beyond being uninhabitable.
The main reason the units are unoccupied is because they are currently being offered for rent.
“Rental vacancies have increased in recent years as rental inventory has managed to recover significantly in many markets,” says Realtor.com Senior Economic Research Analyst Hannah Jones.
“That means more rental homes are sitting empty, waiting to be rented.â€
The second reason for vacancies is that the properties are used for seasonal, recreational or casual purposes.
This includes vacant units used on weekends or for other occasions; seasonal units such as beach cottages or hunting cabins; and interval ownership units such as time shares.
“A home can be considered vacant even if it’s been empty for a relatively short time, such as if it’s a vacation home that’s not being used,” says Channel.
The third reason units are unoccupied is for personal/family reasons.
This includes units where the owner does not want to rent or sell it; is still deciding what to do; or is keeping it for family use.
What does this mean for housing supply?
Unfortunately, more vacant properties do not necessarily result in a higher housing supply.
“Given the reasons why houses tend to sit empty” and that vacancies tend to be only temporary, there is little reason to conclude that the country’s housing supply is anything but insufficient in the face of homebuyers and the request of the tenant, – says Channel.
Currently, home owner vacancy rates are at 0.9%, while rental vacancy rates are at 6.6%.
“These rates are both near recent historic lows as housing supply falls short of demand nationally,” says Jones.
What does this mean for housing prices?
So could house prices fall because of these vacancies?
Not likely.
“More nuanced factors are at play that help dictate prices,” such as location, the type of mortgage rates offered to borrowers, square footage, reasons why homes are vacant and how long homes sit vacant, Channel notes in the analysis. his.
While rental vacancies have risen the most over the past two years, home ownership vacancies have risen just 0.2 percentage points from recent historic lows.
Inventory for sale remains more than 20% below pre-pandemic levels, according to Jones, meaning fewer homes for sale are sitting empty.
“The for-sale market remains underserved, which has kept home prices high despite declining buyer demand,” says Jones.
Metro with the highest vacancy rates
In the top five metros with the highest vacancy rates, vacancy rates are all in the double digits.
Jones says that in popular vacation spots like New Orleans (No. 1) and Miami (No. 2), “demand for short-term or vacation rentals is very seasonal, which can increase vacancies outside season”.
Here are the top five, according to LendingTree.
Total housing units: 466,902
Vacant housing units: 67,704
Vacancy rate: 14.50%
Most common reason for vacancy: For rent
Share of vacant flats for the most common reasons for vacancies: 23.49%
Median home value: $263,500
Average gross rent: $1,159
Total housing units: 2,698,630
Available housing units: 348,710
Vacancy rate: 12.92%
Most common reason for vacancy: The dwelling unit is for seasonal, recreational or casual use.
The share of vacant housing for the most common reasons for vacancy: 50.44%
Median home value: $474,000
Average gross rent: $1,914
Total housing units: 1,540,717
Free housing units: 181 929
Vacancy rate: 11.81%
Most common reason for vacancy: The dwelling unit is for seasonal, recreational or casual use.
The share of vacant flats for the most common reasons for vacancies: 45.18%
Median home value: $372,100
Average gross rent: $1,729
Total housing units: 531,634
Free housing units: 59,867
Vacancy rate: 11.26%
Most common reason for vacancy: Personal/family reasons
Share of vacant flats for the most common reasons for vacancies: 14.99%
Median home value: $247,900
Average gross rent: $1,153
Total housing units: 583,684
Free housing units: 60,389
Vacancy rate: 10.35%
Most common reason for vacancy: For rent
The share of vacant flats for the most common reasons for vacancies: 34.04%
Median home value: $265,200
Average gross rent: $1,200
Metro with the lowest vacancy rates
Only five of the metros in the top 50 have vacancy rates below 5.0%—and in all of them, the most common reason for vacancy is that the housing unit is rented.
Check out these five metros with the lowest vacancy rates.
Total housing units: 1,077,557
Available housing units: 48,906
Vacancy rate: 4.54%
The most common reason for the contest: The housing unit is rented out.
The share of vacant flats for the most common reasons for vacancies: 42.38%
Median home value: $560,900
Average gross rent: $1,670
Total housing units: 1,574,923
Free housing units: 73,470
Vacancy rate: 4.66%
The most common reason for the contest: The housing unit is rented out.
Share of vacant flats for the most common reasons for vacancies: 33.91%
Median home value: $369,500
Average gross rent: $1,427
Total housing units: 2,532,369
Available housing units: 122,794
Vacancy rate: 4.85%
The most common reason for the contest: The housing unit is rented out.
Share of vacant flats for the most common reasons for vacancies: 32.79%
Median home value: $574,000
Average gross rent: $1,945
Total housing units: 484,627
Free housing units: 23,650
Vacancy rate: 4.88%
The most common reason for the contest: The housing unit is rented out.
The share of vacant flats for the most common reasons for vacancies: 35.92%
Median home value: $547,500
Average gross rent: $1,639
Total housing units: 1,090,174
Available housing units: 54,100
Vacancy rate: 4.96%
The most common reason for the contest: The housing unit is rented out.
Share of vacant flats for the most common reasons for vacancies: 39.95%
Median home value: $487,200
Average gross rent: $1,752
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